Did you know home warranties are covered under RESPA?

RESPAnews.com has a fine Q & A section making it a very worthwhile subscription investment for anyone engaged in the business of real estate sales or finance. Here's part of a response on the question of home warranties:

The following is abstracted from a Nov. 15,1996, letter signed by former HUD General Counsel Nelson A. Diaz which is published in a number of RESPA treatises. The inquiry was whether a real estate agent could receive a fee for placing a home warranty with a homeowner:

"A home warranty is a settlement service covered by RESPA (24 CFR § 3500.2 definitions). The RESPA regulations do not prohibit a person from receiving more than one fee in the transaction. However, where a person is receiving an additional fee and is in a position to refer settlement service business (as a real estate agent is), the payment must be for services that are actual, necessary and distinct from the primary services provided by such person (24 CFR § 3550.14(f)(3)).

"Additionally, the fee itself must be reasonably related to services actually performed. So long as the tests cited are met, and you appear to represent that they are, there is no objection to the payment of a fee to the agent for services performed. If, on the other hand, the transaction only consists of referring the home warranty business and no actual services are provided, this would be a violation of Section 8(a) of RESPA. We have made no independent evaluation of the value of the warranty services you describe."