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U.S. Code as of:
01/19/04
Section 2607. Prohibition against kickbacks and unearned fees
(a) Business referrals
No person shall give and no person shall accept any fee,
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) Splitting charges
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) Fees, salaries, compensation, or other payments
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, (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, (3) payments pursuant to cooperative
brokerage and referral arrangements or agreements between real
estate agents and brokers, (4) affiliated business arrangements so
long as (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,(!1) (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 2604(c)
of this title 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), (B) 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, or (5) 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
Secretary 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.
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.
(d) Penalties for violations; joint and several liability; treble
damages; actions for injunction by Secretary and by State
officials; costs and attorney fees; construction of State laws
(1) Any person or persons who violate the provisions of this
section shall be fined not more than $10,000 or imprisoned for not
more than one year, or both.
(2) Any person or persons who violate the prohibitions or
limitations of this section shall be jointly and severally liable
to the person or persons charged for the settlement service
involved in the violation 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
provisions of subsection (c)(4)(A) of this section 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 affiliated business arrangements shall be
construed as being inconsistent with this section.
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