RESPA on Yield Spread

A recent federal court decision, Culpepper v. Inland Mortgage Co. increases the confusion about whether yield spreads are legal. The 11th circuit U. S. Court of Appeals (FL, GA, AL) found, based on a literal reading of RESPA, that a yield spread is a prohibited referral fee under RESPA. HUD has generally recognized yield spreads as permissible as long as they do not violate the spirit of RESPA. However,HUD has never issued regulations or written interpretations on this topic. Until HUD does, we remain at sea.

Copyright © 1998 Compliance Action. Originally appeared in Compliance Action, Vol. 3, No. 1, 1/98