The Consumer Financial Protection Bureau (CFPB) is raising the price of its fines to adjust for inflation, including penalties for violations of the Real Estate Settlement Procedures Act (RESPA). The new fine amounts became law when they were entered into the Federal Register on Jan. 12.
Through a collection of bills and amendments passed by Congress, federal agencies were required to adjust for inflation the civil penalty amounts within their jurisdiction no later than July 1, 2016 and then annually by January 15 every year after.
Under the updated guidelines, the penalty for failing to abide by RESPA increases from $92 to $94. Where the violation was proved intentional, the penalty increases from $185 to $190. The cap for fine amounts is also being raised from $184,767 to $189,427.
Credit: Consumer Financial Protection Bureau
RESPA is a major real estate law passed by the United States Congress in 1974, which, “requires lenders, mortgage brokers, or servicers of home loans to provide borrowers with pertinent and timely disclosures regarding the nature and costs of the real estate settlement process. The Act also prohibits specific practices, such as kickbacks, and places limitations upon the use of escrow accounts,” according to CFPB.
Many entities — from major lenders to homebuilders to agents to mortgage insurers — have been fined millions of dollars for RESPA violations over the years. Realogy and PHH were sued for RESPA violations but had the case successfully dismissed. Zillow was also investigated for alleged RESPA violations but was not fined. Read up on what the act prohibits and allows here.
