Real Estate Settlement Procedures Act (RESPA): Rule To Simplify and Improve the Process of Obtaining Mortgages and Reduce Consumer Settlement Costs; Withdrawal of Revised Definition of “Required Use”, 22822-22826 [E9-11383]

Agencies

• DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Federal Register Volume 74, Number 93 (Friday, May 15, 2009)]
[Rules and Regulations]
[Pages 22822-22826]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-11383]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 3500

[Docket No. FR-5180-F-06]
RIN 2502-AI61


Real Estate Settlement Procedures Act (RESPA): Rule To Simplify 
and Improve the Process of Obtaining Mortgages and Reduce Consumer 
Settlement Costs; Withdrawal of Revised Definition of ``Required Use''

AGENCY: Office of the Assistant Secretary for Housing--Federal Housing 
Commissioner, HUD.

ACTION: Final rule.

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SUMMARY: This final rule withdraws the revisions to the definition of 
``required use'' as provided in HUD's November 17, 2008, final rule 
amending its Real Estate Settlement Procedures Act (RESPA) regulations. 
The November 17, 2008, final rule, in part, revised the existing 
definition of ``required use,'' for the purpose of enhancing 
protections for consumers from deceptive mortgage practices that result 
from certain affiliated business transactions. The revised definition 
of ``required use'' had been scheduled to become effective on January 
16, 2009. On January 15, 2009, and March 10, 2009, HUD published final 
rules delaying the effective date of the definition of ``required 
use.'' The March 10, 2009, final rule provides for an effective date of 
July 16, 2009. The March 10, 2009, rule also solicited comment on 
whether HUD should withdraw the revised definition of ``required use'' 
and, if so, whether HUD should initiate new rulemaking on the subject. 
HUD has taken into consideration the public comments received and has 
decided to withdraw the revised ``required use'' definition. HUD 
therefore leaves in place the definition of ``required use'' before the 
revisions made by the November 17, 2008, final rule. HUD remains 
committed to the RESPA reform goals of the November 17, 2008, final 
rule and concerned about some of the practices reported by commenters, 
and will initiate a new rulemaking process on required use.

DATES: Effective Date: June 15, 2009, except the amendment to 24 CFR 
3500.2, which is effective July 16, 2009.

FOR FURTHER INFORMATION CONTACT: Ivy Jackson, Director, or Barton 
Shapiro, Deputy Director, Office of RESPA and Interstate Land Sales, 
Office of Housing, Department of Housing and Urban Development, 451 7th 
Street, SW., Room 9158, Washington, DC 20410-8000; telephone 202-708-
0502 (this is not a toll-free telephone number). Persons with hearing 
or speech impairments may access this number through TTY by calling the 
toll-free Federal Information Relay Service at 800-877-8339.

SUPPLEMENTARY INFORMATION:

I. Background

    On November 17, 2008 (73 FR 68204), HUD published a final rule 
amending its regulations in 24 CFR part 3500 to further the purposes of 
the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2601-2617) 
by requiring more timely and effective disclosures related

[[Page 22823]]

to mortgage settlement costs for federally related mortgage loans to 
consumers. The final rule followed publication of a March 14, 2008, 
proposed rule (73 FR 14030) and made changes in response to public 
comment and further consideration of certain issues by HUD. Additional 
information regarding the RESPA regulatory amendments, and specifically 
changes made by HUD subsequent to the proposed rule, is provided in the 
preamble to the November 17, 2008, final rule.
    The November 17, 2008, final rule became effective on January 16, 
2009, but provided a longer transition period for the majority of the 
new requirements. Other provisions, however, were scheduled to become 
applicable on January 16, 2009. Among regulatory changes identified as 
being applicable upon the effective date of January 16, 2009, is the 
revised definition of the term ``required use.'' The revision of that 
definition became the subject of litigation, following issuance of the 
final rule. (See National Association of Home Builders, et al. v. Shaun 
Donovan, et al., Civ. Action No. 08-CV-1324, United States District 
Court for the Eastern District of Virginia, Alexandria Division.)
    HUD issued a final rule on January 15, 2009 (74 FR 2369) that 
deferred the effective date of the revised definition of ``required 
use'' for an additional 90 days until April 16, 2009. On March 10, 2009 
(74 FR 10172), HUD published a final rule further delaying the 
applicability date of the revised definition of ``required use'' until 
July 16, 2009. The effective and applicability dates of the remaining 
provisions of the November 17, 2008, final rule were not affected by 
the January 15, 2009, and March 10, 2009, final rules, and they are not 
affected by this final rule.
    During this time HUD reviewed the provisions on ``required use'' 
and, through the March 10, 2009, rule also solicited public comment on 
whether HUD should withdraw the definition, as promulgated in the 
November 17, 2008, final rule, for the purpose of further evaluating 
the scope and operation of the required use provision, and on 
initiating new rulemaking.

II. This Final Rule--Withdrawal of the Definition of ``Required Use''

    This final rule withdraws the revisions to the definition of 
``required use'' made by HUD's November 17, 2008, final rule, and 
leaves in place the definition codified in the RESPA regulations at 24 
CFR 3500.2 prior to that revision.\1\ HUD remains committed to the 
goals of RESPA reform and concerned about affiliated business practices 
that interfere with consumer choice. Therefore, HUD will initiate new 
rulemaking to address RESPA's prohibitions on required uses.
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    \1\ Note that the definition of ``required use'' in the November 
17, 2008, final rule did not take effect on January 16, 2009, and 
has not taken effect. As a result, the definition of ``required 
use'' currently codified in HUD's RESPA regulations at 24 CFR 3500.2 
has remained the applicable definition pending the revised 
definition's effective date. With HUD's withdrawal of the definition 
set forth in the November 17, 2008, final rule, the codified 
definition continues to be the applicable one.
---------------------------------------------------------------------------

    The proposal to withdraw the ``required use'' definition was of 
significant public interest. HUD received over 1,200 comments in 
response to the solicitation of public comments. The comments were 
highly informative and highlighted, among other things, the potential 
complexity of the affiliated business requirements and the need for 
further clarity on the application of ``required use''. The comments 
also underscored the need for HUD to continue to pursue reform in this 
area.
    Based upon HUD's further evaluation of affiliated business 
arrangements, and HUD's review of the comments, HUD determined that its 
revised definition of ``required use'' did not strike the right balance 
between HUD's goals of enhancing consumer protection consistent with 
the statutory scheme of RESPA and providing needed guidance to industry 
participants. Through this final rule, HUD is therefore withdrawing the 
revised definition of ``required use,'' and leaving in place the 
definition currently codified in 24 CFR 3500.2. It is HUD's view that, 
especially given the attention focused on HUD's concerns through this 
rulemaking, the prior definition of ``required use'' can be used to 
address some deceptive referral arrangements, even though it does not 
achieve the enhanced consumer protections that HUD sought with respect 
to mortgages involving affiliated business arrangements. HUD will 
continue to seek consumer protections, especially as mortgage products 
continue to change, often becoming more complex and challenging buyers' 
understanding of the costs and nature of mortgage transactions. HUD is 
not abandoning its goal of providing greater protections to consumers 
in real estate settlement transactions, but remains open to different 
means of achieving this goal.
    New rulemaking offers HUD the opportunity to present a new proposal 
based upon its reevaluation of the required use provision in the 
affiliated business contexts, including the development of analysis in 
support of a new proposal, as well as applied in its various contexts 
in the RESPA regulations, and as further informed by the public 
comments received on the March 10, 2009, rule. New rulemaking will 
allow HUD to further refine its regulations on practices that are 
prohibited under other RESPA provisions. At the same time, HUD believes 
better success will be achieved by providing consumers, industry, and 
other interested members of the public the further opportunity for 
input into this area of RESPA reform.

III. Discussion of the Public Comments Received on the March 10, 2009, 
Final Rule

    The public comment period on the March 10, 2009, rule closed on 
April 9, 2009. HUD received over 1,200 comments on withdrawal of the 
revised definition of ``required use''. Comments were submitted by 
mortgage servicers, homebuilding companies, builder-affiliated mortgage 
and settlement service providers, real estate and mortgage professional 
associations, and consumers. Many of the comments were form letters 
from members of industry organizations, with multiple commenters 
registering nearly identical comments and concerns.
    The March 10, 2009, rule sought comments on the withdrawal or non-
withdrawal of the revised definition of ``required use''. Some comments 
submitted in response to the March 19, 2009, final rule addressed other 
aspects of RESPA, however; for example, suggesting other changes to 
HUD's RESPA regulations or disclosure forms. Comments submitted on 
other aspects of the November 17, 2008, final rule, or RESPA reform, 
are outside the scope of the March 10, 2009, rulemaking and are not 
addressed in this final rule.
    The summary of comments that follows presents the major issues and 
questions raised by the public commenters on the withdrawal of the 
revised definition of ``required use''. The summary is organized in two 
sections. The first section summarizes the comments opposed to 
withdrawal of the required use revision, and the second section 
summarizes those comments supporting withdrawal. Due to the similarity 
and overlap of the issues raised by commenters, HUD has provided a 
consolidated response at the end of the description of the public 
comments.

[[Page 22824]]

A. Comments Opposed to Withdrawal of Required Use Definition

    Comment: Revised ``required use'' provision is needed to promote 
competition. Of those commenters opposing withdrawal, the overwhelming 
basis cited is the absence of needed competition that would result if 
the revised definition of ``required use'' were withdrawn. The 
commenters wrote that homebuilders have established a system that 
restricts buyers to the use of mortgage lenders owned by or affiliated 
with the builders, thereby eliminating the choices available to 
consumers. Commenters stated that this practice of linking incentives 
to the use of certain lenders discourages consumers from shopping for 
service providers and, since closing is some time in the future, the 
buyer cannot determine at the time of application whether the interest 
rate of the mortgage offered in exchange for the incentive will be 
competitive. Commenters stated that the cost of giving up the 
incentives agreed to at the time of application may be too great for a 
buyer to bear even though the loan rate at the time it is locked turns 
out to be unfavorable. Commenters wrote that often buyers do not have 
sufficient knowledge to select an appropriate lender and are at the 
mercy of the builder; that buyers are not skilled enough in real estate 
transactions to realize they are being taken advantage of.
    The commenters wrote that the revised definition of ``required 
use'' in the November 17, 2008, final rule would preclude these 
practices and promote competition beneficial to homebuyers. The 
commenters wrote that while, on their face, the incentives are worth 
many thousands of dollars, they are actually priced into the cost of 
the home and permit the lender to charge higher rates or fees. The 
commenters stated that often the incentives are recouped in the home 
sales price or the loan rate without disclosing it to the consumer, 
with the result that consumers have been overpaying for homes and 
mortgages without realizing it. The commenters stated that the rates 
offered by the builder-affiliated lender are typically significantly 
higher than what the borrower would obtain from free market shopping.
    The commenters opposing withdrawal wrote that if builder-affiliated 
lenders were really offering competitive terms, they would not need to 
offer incentives that ``force'' the client to the affiliated lender. 
The commenters also wrote that the purpose of RESPA is to protect the 
public and allow them to shop for the best services and prices. The 
commenters stated that a delay in implementation of the required use 
provision would defeat this statutory purpose.
    Comment: The revised ``required use'' definition is needed to 
prevent conflict of interest and similar abuses. Several commenters 
wrote that allowing required services in exchange for incentives not 
only excludes competition, but results in borrowers signing with 
certain lenders, even though other lenders offer lower rates, which is 
a practice that is unethical, ``collusion,'' ``anti-competitive,'' and 
ripe for abuse and fraud. The commenters wrote that it is a conflict of 
interest to have a builder-owned mortgage company financing the 
builders' own homes, and for an incentive offered by a builder to 
require a borrower to use a certain lender. The commenters stated that 
often the builder is not actually providing the consumer with a 
discount because the cost of the incentives is buried in the loan rate 
or the cost of the home. The commenters wrote that the unethical 
features of this arrangement are underscored by the fact that the 
builder does not disclose to the buyer until closing that the use of a 
specific, higher-rate lender is required. The commenters stated that 
the disclosure is sometimes buried in unclear contract language. The 
commenters stated that this practice has resulted in borrowers getting 
loans with higher rates, resulting in greater numbers of foreclosures.
    Comment: The practice of linking builder incentives to the use of 
an affiliated mortgage company is unfair to other lenders. The 
commenters stated that even if buyers would prefer another lender, once 
they are presented with an incentive, they feel they must use the 
builder's ``joint venture'' lender or the incentive will be withdrawn. 
Several lenders commented that they often lose business to other 
lenders because of these incentives. Commenters stated that the 
tradeoff is unfair both to buyers because of the higher loan costs and 
to lenders who cannot compete with the builder's arrangement. Another 
commenter wrote that builder-affiliated lenders typically employ 
marginal loan officers that are merely order-takers and do not possess 
the education, experience, or knowledge to competently evaluate a 
potential borrower's financial situation, further jeopardizing the 
opportunity for consumers to choose a beneficial mortgage product.
    The commenters stated that buyers should be able to keep the 
incentives and also choose their lender. One commenter wrote that these 
incentives are an ``injustice'' and a ``restraint of trade.'' Other 
commenters stated that builders are in control of every aspect of the 
transaction and are using these incentives simply to make more money, 
without actually providing a benefit to consumers contrary to 
advertisement. Commenters urged HUD to make home buying a fair playing 
field for consumers and lenders, and force builders to follow the same 
rules that other parties to the real estate transaction must follow.

B. Comments Supportive of Withdrawal of Revised Definition of 
``Required Use''

    Comment: The revised required use provision would destroy 
homebuilder-affiliate business model and corresponding builder forward 
commitments. Many commenters wrote that the required use provision 
would unnecessarily destroy the homebuilder-affiliate business model, 
driving many builder-affiliated lenders out of business. The commenters 
wrote that one of the incentives most frequently offered is the buying 
down of interest rates through the purchase of forward commitments. In 
exchange for a fee, the homebuilder buys down the interest rates in the 
commitments to present attractive financing to their customers. Because 
commitments are expensive and require that a significant number of the 
homebuilder's customers use the lender, homebuilders limit the 
companies they purchase commitments from to their affiliates. The 
commenters wrote that the revised required use provision would prohibit 
homebuilders from purchasing forward commitments from affiliates, but 
would not prohibit these arrangements with unaffiliated lenders. In 
consequence, the final rule would terminate the ability of builders to 
help consumers obtain competitively priced credit.
    In a similar vein, commenters stated that the revised required use 
provision would preclude homebuilders from offering other incentives to 
customers who use affiliated lenders--such as closing cost credits and 
home upgrades--unless homebuilders offer the incentives regardless of 
the settlement service provider. The commenters wrote that the joint 
business model depends on the ability to offer incentives to encourage 
the use of affiliates. According to the commenters, many affiliated 
lenders do not otherwise advertise or market their products to the 
general public. The commenters wrote that affiliated lenders who are 
not designed to compete on the open market would lose considerable 
business as a result of the revised required use provision.

[[Page 22825]]

    Comment: The revised definition of ``required use'' creates an 
unintended loophole that decreases rather than increases consumer 
protections. Some commenters stated that the revised definition of 
``required use'' is worded in a confusing way that provides builders 
with a ``loophole'' that would decrease, rather than increase, consumer 
protections and competition. This loophole, according to a commenter, 
allows builders to set up their own mortgage company and offer 
incentives through that company, and thereby escape the oversight and 
protections sought by HUD's revised definition of ``required use.'' 
Commenters wrote that a definition of ``required use'' should clearly 
state that borrowers are allowed to shop for settlement services free 
of any influence from the builder and that incentives should be offered 
regardless of the customer's choice for mortgage or title services.
    Other commenters wrote that HUD failed to analyze the potential 
impact of the new definition of ``required use'' and that the revised 
definition engenders a more confusing, less transparent loan 
origination process that will discourage consumer free choice. 
Commenters urged HUD to draft a more narrowly focused definition that 
would not prohibit builders, real estate brokers and others from 
offering genuine incentives to customers. The commenters stated their 
support for withdrawal of the revised definition of ``required use'' 
but also stated their support for HUD to continue to pursue reform in 
this area.
    Comment: The revised definition of ``required use'' lacks the 
necessary foundational support for the change to the definition of 
``required use''. Some commenters wrote that the revised definition of 
``required use'' is based solely on anecdotal evidence, and not 
supportable data. The commenters disagreed with HUD's statements that 
homebuilder-affiliated lenders may not offer the best products and 
services, that their fees may be higher than their competitors, and 
that the transactions are too complicated for borrowers to calculate 
the value of the package deal they receive when using an affiliated 
lender. The commenters wrote that the justifications offered by HUD 
were ``incomplete, confusing, inaccurate, and/or based upon flawed 
reasoning or suspect evidence.''
    Definition of ``required'' is contrary to the term's plain meaning 
under RESPA. Some commenters wrote that the revised definition of 
``required use'' is contrary to the plain meaning of the words in the 
RESPA statute itself because defining ``required use'' to mean any 
incentive offered to a buyer to use an affiliated company contradicts 
the unambiguous meaning of the statutory term ``required.'' The 
commenters wrote that HUD should not confuse legitimate incentive 
arrangements with undue influence of required use of a product or 
service. The commenters also wrote that the required use provision 
contradicts the mandate of Section 8(c) of RESPA that the only criteria 
that may be imposed on affiliated business arrangements are those 
contained in the statute.
    The revised definition of ``required use'' is beyond the scope of 
HUD's authority. Some commenters wrote that HUD should withdraw the 
definition of ``required use'' because the revised definition is beyond 
the scope of HUD's authority under RESPA. The commenters wrote that 
RESPA prohibits agency restrictions on affiliated business associations 
except those contained in the statute itself. The commenters wrote that 
HUD's rulemaking authority extends only to interpret RESPA, to 
implement the statute, and to grant exemptions that broaden the 
permissibility of certain behavior. According to the commenters, 
Congress did not give HUD the power to prescribe additional 
restrictions, which HUD did in its revision to the definition of 
``required use,'' and therefore the revised definition is invalid. The 
commenters wrote that RESPA prohibits any limitation on affiliated 
business association other than requiring that a proper disclosure is 
given, the person is not required to use a particular settlement 
service provider, and nothing of value is received other than payments 
permitted under RESPA. The commenters wrote that RESPA demonstrates 
that Congress intended to favor affiliated business arrangements in 
nearly every manifestation.
    Comment: Revised required use provision unfairly targets 
homebuilders. Several commenters objected to the required use provision 
on the basis that it unfairly singles out homebuilders from all other 
entities involved in the sale and financing of real estate. The 
commenters wrote that the rule would not prohibit lenders from offering 
incentives to homebuyers who use an affiliated title company. 
Similarly, the commenters stated, real estate agents would be able to 
offer incentives to homebuyers that use the agent's affiliated lender 
or title company. The commenters wrote that consumers should not be 
denied access to the legitimate incentives offered by builder-
affiliated lenders because of a few unscrupulous lenders and builders. 
The commenters wrote that there is no rational basis to support the 
proposition that homebuilders should be treated differently from other 
entities.
    Comment: Builder affiliated lender model has efficiencies which are 
passed on to consumers. Commenters supporting withdrawal stated that 
affiliated lenders can assist and create efficiencies that result in 
discounts in a complex transaction that non-affiliated lenders cannot 
always handle in a timely manner because of their lack of experience 
with new home sales. These commenters emphasized the convenience of 
``one stop shopping'' as a significant consumer benefit that will be 
eliminated unless HUD withdraws the revised definition of ``required 
use.'' The commenters wrote that rather than a consumer having to deal 
with multiple settlement service providers, affiliated providers 
coordinate the home purchase process by finding a loan which they 
underwrite and ensure that the funding will be ready at the closing 
date selected by the builder and buyer. The commenters wrote that 
consumers receive better service from affiliated lenders because of the 
efficiencies resulting from the relationship with the builder, the 
linked communication systems and standardized policies, and the 
lender's own desire to obtain repeat business and recommendations. 
Because affiliated lenders work with high volumes of transactions, they 
have proven controls that ensure a complete, fast, and fair 
transaction. Affiliated lender commenters wrote that because of their 
affiliation, they have been able to help borrowers who have had 
problems with other lenders or who needed to close quickly. The 
commenters wrote that post-closing surveys show a customer satisfaction 
rate of 90 percent with affiliates.
    Comment: Affiliated companies help prevent mortgage fraud. 
Commenters wrote that when outside lenders are involved, the potential 
for mortgage fraud is greater than when consumers use affiliated 
companies because the outside lender's personnel are often not as well 
trained as the personnel of affiliated lenders. Commenters stated that 
because of their lack of affiliation, outside lenders do not have as 
great a motivation to prevent fraud as do affiliated lenders. The 
commenters stated that in affiliated relationships, both entities can 
work together to prevent mortgage fraud.

C. HUD Response to the Public Comments

    HUD appreciates all the comments submitted in response to the 
solicitation of comment in the March 10, 2009, rule, on the proposal to 
withdraw the revised

[[Page 22826]]

``required use'' definition in the November 17, 2008, final rule. HUD 
reviewed and gave careful consideration to all views expressed. 
Following consideration of the comments and HUD's further evaluation of 
the definition and application of ``required use'' HUD has decided to 
withdraw the revised definition and, leave in place the definition of 
``required use'' as found in HUD's codified regulations in 24 CFR 
3500.2, and which has remained in effect since the revised definition 
of ``required use'' in the November 17, 2008, final rule, had not taken 
effect.
    HUD reiterates its commitment to fair real estate settlement 
practices that are not misleading, prevent abuse, offer proper 
disclosures to homebuyers, and promote choice and competition. HUD's 
intent in revising the definition of ``required use'' was to clarify 
its interpretation of RESPA's requirements with respect to transactions 
involving affiliated businesses in order to promote more competition 
among settlement service providers. After further evaluation and 
consideration of the concerns voiced by consumers and industry 
participants from various fields about the application of the revised 
definition of ``required use,'' HUD has concluded that all would 
benefit by HUD withdrawing the revised definition and addressing 
``required use'' through new rulemaking.
    HUD recognizes that the affiliations of businesses involved in 
complex home purchase transactions can themselves be complex 
arrangements, and that consumers may have difficulty understanding 
whether there is value in using affiliated businesses in mortgage 
transactions. HUD has determined that further development of the 
concept of ``required use'' is necessary to assure that, especially in 
the affiliated business context, its application protects consumers by 
eliminating abusive practices that increase costs for unsuspecting 
consumers. The comments submitted in response to the March 10, 2009, 
rule provide HUD with a good starting point for going forward on this 
issue. Consumers and industry and the public generally will have 
further opportunity to offer feedback when HUD issues a new proposed 
rule on this subject.
    Although HUD is withdrawing the revised definition of ``required 
use,'' a definition of ``required use'' remains part of HUD's RESPA 
regulations. That definition, which focuses its discount language on 
settlement services, is the one that was in place in HUD's RESPA 
regulations prior to HUD's issuance of the November 17, 2008, final 
rule, and which has remained in place since the revised definition of 
``required use'' never took effect. Additionally, although HUD is 
withdrawing the revised definition of ``required use'', the withdrawal 
should not be interpreted to signal any lessening of HUD oversight or 
enforcement of existing statutory and regulatory provisions in this 
area. HUD interprets its definition generally as aiming to distinguish 
the features of legitimate incentives and discounts offered to 
consumers from those that may result in undisclosed or higher costs to 
consumers. The public comments on this subject underscore the need for 
greater attention to and understanding of the treatment of discounts to 
consumers under RESPA and HUD's RESPA regulations.
    With respect to the more specific issues expressed by commenters on 
the subject of ``required use'', HUD will defer further discussion of 
such issues to any new rulemaking. Generally, however, HUD notes that 
it revised the definition of ``required use'' to more effectively 
realize Congress's intent in passing RESPA. RESPA's principal goal is 
consumer protection. RESPA provides HUD with the requisite authority to 
promulgate a revised definition of ``required use'' that meets the 
goals of RESPA and HUD's mandate to enforce RESPA. Today's final rule 
will enable HUD to reconsider all of the issues involved in the 
application of the required use concept and to better craft 
requirements and limitations that address the valid concerns raised in 
the preceding rulemaking.

IV. Findings and Certifications

Federalism Impact

    This rule does not have Federalism implications and does not impose 
substantial direct compliance costs on state and local governments or 
preempt State law within the meaning of Executive Order 13132 (entitled 
``Federalism'').

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
1531-1538) (UMRA) requires Federal agencies to assess the effects of 
their regulatory actions on state, local, and tribal governments and on 
the private sector. This rule does not, within the meaning of the UMRA, 
impose any Federal mandates on any state, local, or tribal governments 
nor on the private sector.

List of Subjects in 24 CFR Part 3500

    Consumer protection, Condominiums, Housing, Mortgagees, Mortgage 
servicing, Reporting and Recordkeeping requirements.

0
Accordingly, 24 CFR part 3500 is amended as follows:

PART 3500--REAL ESTATE SETTLEMENT PROCEDURES ACT

0
1. The authority citation for part 3500 continues to read as follows:

    Authority:  12 U.S.C. 2601 et. seq: 42 U.S.C. 3535(d).


0
2. Section 3500.1(b)(1) is revised to read as follows:


Sec.  3500.1  Designation and applicability.

* * * * *
    (b) * * *
    (1) Sections 3500.8(b), 3500.17, 3500.21, 3500.22 and 3500.23, and 
Appendices E and MS-1 are applicable commencing January 16, 2009.
* * * * *

0
3. Effective July 16, 2009, in Sec.  3500.2, revise the definition of 
``Required use'' to read as follows:


Sec.  3500.2  Definitions.

* * * * *
    Required use means a situation in which a person must use a 
particular provider of a settlement service in order to have access to 
some distinct service or property, and the person will pay for the 
settlement service of the particular provider or will pay a charge 
attributable, in whole or in part, to the settlement service. However, 
the offering of a package (or combination of settlement services) or 
the offering of discounts or rebates to consumers for the purchase of 
multiple settlement services does not constitute a required use. Any 
package or discount must be optional to the purchaser. The discount 
must be a true discount below the prices that are otherwise generally 
available, and must not be made up by higher costs elsewhere in the 
settlement process.
* * * * *

    Dated: May 7, 2009.
Ronald Y. Spraker,
Acting General Deputy Assistant Secretary for Housing--Deputy Federal 
Housing Commissioner.
[FR Doc. E9-11383 Filed 5-12-09; 4:15 pm]
BILLING CODE 4210-67-P