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OCC BULLETIN 2002-3
Subject: Real Estate Settlement Procedures Act
Date: January 15, 2002
To: Chief Executive Officers and Compliance Officers of All National Banks and All Examining Personnel
Description: Examiner Guidance – Mark-Up of Settlement Service Fees
The guidance attached to this bulletin continues to apply to federal savings associations.
On July 5, 2001, the Court of Appeals for the Seventh Circuit held that Section 8(b) of the Real Estate Settlement Procedures Act (RESPA) was not violated when a title company marked-up a fee of a third-party settlement servicer without performing any additional services (Echevarria v. Chicago Title and Trust Co., 256 F.3d 623 (7th Cir. 2001)). Although the Department of Housing and Urban Development has stated that this practice is prohibited by section 8(b) of RESPA, the court's ruling holds that this practice, in certain circumstances, is not a violation in the Seventh Circuit.
Attached is Federal Financial Institutions Examinations Council (FFIEC) guidance to assist examiners in applying the Seventh Circuit's ruling. This guidance represents the supervisory policy of the FFIEC agencies; it does not insulate an institution engaged in mark-ups from litigation risk, even where the property is located within the Seventh Circuit (Wisconsin, Illinois, and Indiana).
Questions about this issuance and the attached examiner guidance may be directed to your supervisory office or the Compliance Division at (202) 649-5470.
David G. Hammaker