It appears as though our Phoenix, Arizona
market is adjusting. I’ve been keeping track since January 1, 2009 (and before),
and posting updates regularly. If...
Real Estate Settlement Procedures Act 1974 - RESPA
What does RESPA mean to the buyer and the seller? I've included an excerpt from the Arizona Association of Realtors - www.aaronline.com which spells out clearly how important this Act is. I've only included a portion of Section 9 which I believe to be self-explanatory. Enforcement actions are on the increase. If a seller "requires" the buyer to use their title company, then according to RESPA, seller can be required to pay for buyer's ALTA (lender's) policy. Just one tip of many I will share as I continue to post on my blog.
What does Section 9 of RESPA prohibit?
Section 9 of RESPA prohibits a seller from requiring the buyer to buy title insurance from a specific title insurance company. “Requiring” means the buyer must purchase title insurance or pay a charge attributable to the title insurance from a particular title insurance company in order to purchase the property.
Is it a RESPA violation if the seller requires the buyer to use a specific title company when the seller is paying for the buyer's title insurance? HUD has indicated that it “will not enforce Section 9 of RESPA against a seller who selects the title insurance company if the seller is paying for the owner's title insurance policy, and does not require the buyer to use the title insurance company for the simultaneously issued lender's policy.” However, HUD has indicated that it would take action “in situations where a seller required a buyer to pay the seller an amount towards closing costs and the seller used a portion of the buyer's paid closing costs for the owner's title insurance without providing the buyer with a choice of that title company.” (See, www.aaronline.com/documents/respa_enforc.aspx).
