In today’s Federal Register, HUD issued the following Interpretative Rule on compensation paid by a home warranty company (HWC) to a real estate broker or agent in connection with the sale of a homeowner warranty to a homebuyer or seller in a transaction involving a federally related mortgage loan: (1) A payment by an HWC for marl (2) Depending upon the facts of a particular case, an HWC may compensate a real estate broker or agent for services when those services are actua1, necessary and distinct from the primaty services provided by the real estate broker or agent, and when those additional services are not nominal and are not services for which there is a duplicative charge; and (3) 1be amount of compensation from the HWCthat is permitted under section 8 for such additional services must be reasonably related to the value of those services and not include compensation for referrals of business. The rationale HOD used in issuing this Interpretative Rule is not limited to the specific compensation issue addressed by the Rule, as this rationale may easily be applied to any potential “compensated referral” situation involving a federally related mortgage loan. For a complete explanation of the Interpretative Rule and HUD’s reasoning, we have attached a copy of the Federal Register pages where they are published . The Interpretative Rule represents HUD’s interpretation of section 8 of RESPA and the applicable sections of Regulation X and is exempt from the public comment requirement. However, HUD is pennitting public comments and if you wish to submit a written comment, you must do so by no later than July 26, 2010. The procedures are set out in the attached pages of to day’s Federal Register.

Complete Memorandum