§ 2607. Prohibition against kickbacks and unearned fees

Footnotes

1. 1 So in original.

Legislative history

Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.

1. 1974

   Real Estate Settlement Procedures Act of 1974

   Pub. L. 93–533 § 8 · 88 Stat. 1724

   Enacted · 12 U.S.C. § 2607

   Pub. L. 93–533, § 8, Dec. 22, 1974, 88 Stat. 1727

   Source evidence

   Code source credit
   Pub. L. 93–533, § 8, Dec. 22, 1974, 88 Stat. 1727

   Enacted provision · exact public law section
   Sec. 8. prohibition against kickbacks and unearned fees (a) No person shall give and no person shall accept any fee, 12 USC 2607. kickback, or thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or a part of a real estate settlement service involving a federally related mortgage loan shall be referred to any person. (b) No person shall give and no person shall accept any portion, split, or percentage of any charge made or received for the rendering of a real estate settlement service in connection with a transaction involving a federally related mortgage loan other than for services actually performed. (c) Nothing in this section shall be construed as prohibiting (1) the payment of a fee (A) to attorneys at law for services actually rendered or (B) by a title company to its duly appointed agent for services actually performed in the issuance of a policy of title insurance or (C) by a lender to its duly appointed agent for services actually performed in the making of a loan, or (2) the payment to any person of a bona fide salary or compensation or other payment for goods or facilities actually furnished or for services actually performed. (d) (1) Any person or persons who violate the provisions of this section shall lie fined not more than $10,000 or imprisoned for not more than one year, or both. (2) In addition to the penalties provided by paragraph (1) of this subsection, any person or persons who violate the provisions of subsection (a) shall be jointly and severally liable to the person or persons whose business has been referred in an amount equal to three times the value or amount of the fee or thing of value, and any person or persons who violate the provisions of subsection (b) shall be jointly and severally liable to the person or persons charged for the settlement services involved in an amount equal to three times the amount of the portion, split, or percentage. In any successful action to enforce the liability under this paragraph, the court may award the court costs of the action together with a reasonable attorney’s fee as determined by the court.

2. 1976

   Real Estate Settlement Procedures Act Amendments of 1975

   Pub. L. 94–205 § 7 · 89 Stat. 1157

   Added · 12 U.S.C. § 2607(c)

   Pub. L. 94–205 added cls. (3) and (4)

   Source evidence

   Code amendment note
   Subsec. (c). Pub. L. 94–205 added cls. (3) and (4).

   Enacted provision · exact public law section
   Sec. 7. Section 8 of the Real Estate Settlement Procedures Act of 12 USC 2607. 1974 is amended in subsection (c) by striking out “or” immediately before “(2)”, and by inserting before the period at the end thereof the following: “, or (3) payments pursuant to cooperative brokerage and referral arrangements or agreements between real estate agents and brokers, or (4) such other payments or classes of payments or other transfers as are specified in regulations prescribed by the Secretary, after consultation with the Attorney General, the Administrator of Veterans’ Affairs, the Federal Home Loan Bank Board, the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System, and the Secretary of Agriculture”.

3. 1983

   Rural Housing Amendments of 1983

   Pub. L. 98–181 § 461(b) · 97 Stat. 1153

   1. Redesignated · 12 U.S.C. § 2607(c)

      Pub. L. 98–181, § 461(b), redesignated cl. (4) as (5)

   2. Redesignated · 12 U.S.C. § 2607(c)

      Pub. L. 98–181, § 461(b), added cl. (4) and provisions following cl. (5), as so redesignated, relating to arrangements which shall not be considered a violation of cl. (4)(B)

   Source evidence

   Code amendment note
   Subsec. (c). Pub. L. 98–181, § 461(b), redesignated cl. (4) as (5), added cl. (4) and provisions following cl. (5), as so redesignated, relating to arrangements which shall not be considered a violation of cl. (4)(B).

   Enacted provision · exact public law section
   (b) Section 8(c) of such Act is amended— (1) by striking out “or” before “(3)”; (2) by redesignating clause (4) as clause (5); (3) by inserting the following after “brokers,” at the end of clause (3): “(4) controlled business arrangements so long as (A) at or prior to the time of the referral a disclosure is made of the existence of such an arrangement to the person being referred and, in connection with the referral, such person is provided a written estimate of the charge or range of charges generally made by the provider to which the person is referred, except that where a lender makes the referral, this requirement may be satisfied as part of and at the time that the estimates of settlement charges required under section 5(c) are provided, (B) 12 USC 2604. such person is not required to use any particular provider of settlement services, and (C) the only thing of value that is received from the arrangement, other than the payments permitted under this subsection, is a return on the ownership interest or franchise relationship,”; and (4) by inserting the following new sentence at the end thereof: “For purposes of the preceding sentence, the following shall not be considered a violation of clause 4(B): (i) any arrangement that requires a buyer, borrower, or seller to pay for the services of an attorney, credit reporting agency, or real estate appraiser chosen by the lender to represent the lender’s interest in a real estate transaction, or (ii) any arrangement where an attorney or law firm represents a client in a real estate transaction and issues or arranges for the issuance of a policy of title insurance in the transaction directly as agent or through a separate corporate title insurance agency that may be established by that attorney or law firm and operated as an adjunct to his or its law practice.”.

4. 1983

   Rural Housing Amendments of 1983

   Pub. L. 98–181 § 461(c) · 97 Stat. 1153

   Substituted · 12 U.S.C. § 2607(d)(2)

   Pub. L. 98–181, § 461(c), substituted provisions setting forth the liability of persons violating the prohibitions or limitations of this section for provisions setting forth liability, in addition to penalties provided in par. (1), of persons violating subsecs. (a) and (b) of this section, plus costs and attorney’s fees

   Source evidence

   Code amendment note
   Subsec. (d)(2). Pub. L. 98–181, § 461(c), substituted provisions setting forth the liability of persons violating the prohibitions or limitations of this section for provisions setting forth liability, in addition to penalties provided in par. (1), of persons violating subsecs. (a) and (b) of this section, plus costs and attorney’s fees.

   Enacted provision · exact public law section
   (c) Section 8(d) of such Act is amended by striking out paragraph (2) and inserting in lieu thereof the following: “(2) Any person or persons who violate the prohibitions or limitations Violations. of this section shall be jointly and severally liable to the person or persons charged for the settlement service involved in the viola-tion in an amount equal to three times the amount of any charge paid for such settlement service. “(3) No person or persons shall be liable for a violation of the Ante, p. 1231. provisions of section 8(c)(4)(A) if such person or persons proves by a preponderance of the evidence that such violation was not intentional and resulted from a bona fide error notwithstanding maintenance of procedures that are reasonably adapted to avoid such error. “(4) The Secretary, the Attorney General of any State, or the insurance commissioner of any State may bring an action to enjoin violations of this section. “(5) In any private action brought pursuant to this subsection, the court may award to the prevailing party the court costs of the action together with reasonable attorneys fees. “(6) No provision of State law or regulation that imposes more stringent limitations on controlled business arrangements shall be construed as being inconsistent with this section.”.

5. 1983

   Rural Housing Amendments of 1983

   Pub. L. 98–181 § 461(c) · 97 Stat. 1153

   Added · 12 U.S.C. § 2607(d)(3)(6)

   Pub. L. 98–181, § 461(c), added pars. (3) to (6)

   Source evidence

   Code amendment note
   Subsec. (d)(3) to (6). Pub. L. 98–181, § 461(c), added pars. (3) to (6).

   Enacted provision · exact public law section
   (c) Section 8(d) of such Act is amended by striking out paragraph (2) and inserting in lieu thereof the following: “(2) Any person or persons who violate the prohibitions or limitations Violations. of this section shall be jointly and severally liable to the person or persons charged for the settlement service involved in the viola-tion in an amount equal to three times the amount of any charge paid for such settlement service. “(3) No person or persons shall be liable for a violation of the Ante, p. 1231. provisions of section 8(c)(4)(A) if such person or persons proves by a preponderance of the evidence that such violation was not intentional and resulted from a bona fide error notwithstanding maintenance of procedures that are reasonably adapted to avoid such error. “(4) The Secretary, the Attorney General of any State, or the insurance commissioner of any State may bring an action to enjoin violations of this section. “(5) In any private action brought pursuant to this subsection, the court may award to the prevailing party the court costs of the action together with reasonable attorneys fees. “(6) No provision of State law or regulation that imposes more stringent limitations on controlled business arrangements shall be construed as being inconsistent with this section.”.

6. 1988

   Housing and Community Development Act of 1987

   Pub. L. 100–242 title V § 570(g) · 101 Stat. 1815

   Substituted · 12 U.S.C. § 2607(c)(5)

   Pub. L. 100–242 substituted “clause (4)(B)” for “clause 4(B)”

   Source evidence

   Code amendment note
   Subsec. (c)(5). Pub. L. 100–242 substituted “clause (4)(B)” for “clause 4(B)”.

   Enacted provision · exact public law section
   (g) Real Estate Settlement Procedures.— Section 8(c)(5) of the 12 USC 2607. Real Estate Settlement Procedures Act of 1974 is amended by striking “clause 4(B)” and inserting “clause (4)(B)”.

7. 1991

   Pub. L. 102–54 § 13(d)(4) · 105 Stat. 267

   Substituted · 12 U.S.C. § 2607(c)(5)

   Pub. L. 102–54 substituted “Secretary of Veterans Affairs” for “Administrator of Veterans’ Affairs”

   Source evidence

   Code amendment note
   Subsec. (c)(5). Pub. L. 102–54 substituted “Secretary of Veterans Affairs” for “Administrator of Veterans’ Affairs”.

   Enacted provision · exact public law section
   (4) Section 8 of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2607) is amended by striking out “Administrator of Veterans’ Affairs” in subsection (c)(5) and inserting in lieu thereof “Secretary of Veterans Affairs”.

8. 1996

   Department of Commerce and Related Agencies Appropriations Act, 1997

   Pub. L. 104–208 § 2103(c)(2) · 110 Stat. 3009

   Substituted · 12 U.S.C. § 2607(c)(4)

   Pub. L. 104–208, § 2103(c)(2), substituted “affiliated business arrangements” for “controlled business arrangements”

   Source evidence

   Code amendment note
   Subsec. (c)(4). Pub. L. 104–208, § 2103(c)(2), substituted “affiliated business arrangements” for “controlled business arrangements”.

   Enacted provision · exact public law section
   (2) in subsections (c)(4) and (d)(6) of section 8, by striking 12 USC 2607. “controlled business arrangements” and inserting “affiliated business arrangements”.

9. 1996

   Department of Commerce and Related Agencies Appropriations Act, 1997

   Pub. L. 104–208 § 2103(d) · 110 Stat. 3009

   Amended · 12 U.S.C. § 2607(c)(4)(A)

   Pub. L. 104–208, § 2103(d), amended subcl. (A) generally. Prior to amendment, subcl. (A) read as follows: “at or prior to the time of the referral a disclosure is made of the existence of such an arrangement to the person being referred and, in connection with the referral, such person is provided a written estimate of the charge or range of charges generally made by the provider to which the person is referred, except that where a lender makes the referral, this requirement may be satisfied as part of and at the time that the estimates of settlement charges required under section 2604(c) of this title are provided,”

   Source evidence

   Code amendment note
   Subsec. (c)(4)(A). Pub. L. 104–208, § 2103(d), amended subcl. (A) generally. Prior to amendment, subcl. (A) read as follows: “at or prior to the time of the referral a disclosure is made of the existence of such an arrangement to the person being referred and, in connection with the referral, such person is provided a written estimate of the charge or range of charges generally made by the provider to which the person is referred, except that where a lender makes the referral, this requirement may be satisfied as part of and at the time that the estimates of settlement charges required under section 2604(c) of this title are provided,”.

   Enacted provision · exact public law section
   (d) Disclosures by Telephone or Electronic Media.— Section 8(c)(4) of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2607(c)(4)(A)) is amended by striking subparagraph (A) and inserting the following “(A) a disclosure is made of the existence of such an arrangement to the person being referred and, in connection with such referral, such person is provided a written estimate of the charge or range of charges generally made by the provider to which the person is referred (i) in the case of a face-to-face referral or a referral made in writing or by electronic media, at or before the time of the referral (and compliance with this requirement in such case may be evidenced by a notation in a written, electronic, or similar system of records maintained in the regular course of business); (ii) in the case of a referral made by telephone, within 3 business days after the referral by telephone, (and in such case an abbreviated verbal disclosure of the existence of the arrangement and the fact that a written disclosure will be provided within 3 business days shall be made to the person being referred during the telephone referral); or (iii) in the case of a referral by a lender (including a referral by a lender to an affiliated lender), at the time the estimates required under section 5(c) are provided (notwithstanding clause (i) or (ii)); and any required written receipt of such disclosure (without regard to the manner of the disclosure under clause (i), (ii), or (iii)) may be obtained at the closing or settlement (except that a person making a face-to-face referral who provides the written disclosure at or before the time of the referral shall attempt to obtain any required written receipt of such disclosure at such time and if the person being referred chooses not to acknowledge the receipt of the disclosure at that time, that fact shall be noted in the written, electronic, or similar system of records maintained in the regular course of business by the person making the referral),”.

10. 1996

    Department of Commerce and Related Agencies Appropriations Act, 1997

    Pub. L. 104–208 § 2103(c)(2) · 110 Stat. 3009

    Substituted · 12 U.S.C. § 2607(d)(6)

    Pub. L. 104–208, § 2103(c)(2), substituted “affiliated business arrangements” for “controlled business arrangements”

    Source evidence

    Code amendment note
    Subsec. (d)(6). Pub. L. 104–208, § 2103(c)(2), substituted “affiliated business arrangements” for “controlled business arrangements”.

    Enacted provision · exact public law section
    (2) in subsections (c)(4) and (d)(6) of section 8, by striking 12 USC 2607. “controlled business arrangements” and inserting “affiliated business arrangements”.

11. 2010

    Consumer Financial Protection Act of 2010

    Pub. L. 111–203 § 1098(6) · 124 Stat. 1376

    Substituted · 12 U.S.C. § 2607(c)(5)

    Pub. L. 111–203, § 1098(6), which directed substituting “Bureau” for “Secretary”, was executed by making the substitution for “Secretary” the first time appearing, to reflect the probable intent of Congress

    Source evidence

    Code amendment note
    Subsec. (c)(5). Pub. L. 111–203, § 1098(6), which directed substituting “Bureau” for “Secretary”, was executed by making the substitution for “Secretary” the first time appearing, to reflect the probable intent of Congress.

    Enacted provision · exact public law section
    (6) in section 8(c)(5) (12 U.S.C. 2607(c)(5)), by striking “Secretary” and inserting “Bureau”;

    Effective date note
    Amendment by Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 111–203, set out as a note under section 552a of Title 5, Government Organization and Employees.

12. 2010

    Consumer Financial Protection Act of 2010

    Pub. L. 111–203 § 1098(7)(A) · 124 Stat. 1376

    Inserted · 12 U.S.C. § 2607(d)

    Pub. L. 111–203, § 1098(7)(A), inserted “Bureau and” before “Secretary” in heading that had been supplied editorially

    Source evidence

    Code amendment note
    Subsec. (d). Pub. L. 111–203, § 1098(7)(A), inserted “Bureau and” before “Secretary” in heading that had been supplied editorially.

    Enacted provision · exact public law section
    (A) in the subsection heading, by inserting “Bureau and” before “Secretary”; and

    Effective date note
    Amendment by Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 111–203, set out as a note under section 552a of Title 5, Government Organization and Employees.

13. 2010

    Consumer Financial Protection Act of 2010

    Pub. L. 111–203 § 1098(7)(B) · 124 Stat. 1376

    1. Added · 12 U.S.C. § 2607(d)(4)

       Pub. L. 111–203, § 1098(7)(B), added par. (4)

    2. Struck · 12 U.S.C. § 2607(d)(4)

       Pub. L. 111–203, § 1098(7)(B), struck out former par. (4) which read as follows: “The Secretary, the Attorney General of any State, or the insurance commissioner of any State may bring an action to enjoin violations of this section.”

    Source evidence

    Code amendment note
    Subsec. (d)(4). Pub. L. 111–203, § 1098(7)(B), added par. (4) and struck out former par. (4) which read as follows: “The Secretary, the Attorney General of any State, or the insurance commissioner of any State may bring an action to enjoin violations of this section.”

    Enacted provision · exact public law section
    (B) by striking paragraph (4), and inserting the following: “(4) The Bureau, the Secretary, or the attorney general or the insurance commissioner of any State may bring an action to enjoin violations of this section. Except, to the extent that a person is subject to the jurisdiction of the Bureau, the Secretary, or the attorney general or the insurance commissioner of any State, the Bureau shall have primary authority to enforce or administer this section, subject to subtitle B of the Consumer Financial Protection Act of 2010.” ;

    Effective date note
    Amendment by Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 111–203, set out as a note under section 552a of Title 5, Government Organization and Employees.

15 of 15 references resolved to an enrolled provision