BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D.C.  20551

DIVISION OF CONSUMER
AND COMMUNITY AFFAIRS

CA 02-11

August 29, 2002

TO THE OFFICERS AND MANAGERS IN CHARGE OF CONSUMER AFFAIRS SECTIONS:

SUBJECT: Interagency Examiner Guidance on Settlement Service Markups under the Real Estate Settlement Procedures Act ("RESPA")

This CA letter serves to notify you that the guidance provided in CA-02-4, Interagency Examiner Guidance on Settlement Service Mark-ups under RESPA, now applies to loans secured by properties located in the Fourth Circuit, in addition to the Seventh Circuit. On May 22, 2002, the U.S. Court of Appeals for the Fourth Circuit issued a final opinion in the case of Boulware v. Crossland Mortgage Corp. that adopted the position of the Seventh Circuit in the Echevarria case. Consequently, for loans secured by property located in either the Fourth or Seventh Circuit, examiners should not cite violations of RESPA, Section 8(b) where (1) a consumer is charged more for a settlement service provided by a third party than is actually paid to the third party, and (2) the third party is not involved in the mark-up and does not collect the fee or accept any portion of the mark-up.

The Fourth Circuit covers the states of Maryland, Virginia, West Virginia, North Carolina, and South Carolina. Any future circuit court decisions made in this regard will be handled on a case-by-case basis.

If you have any questions, please contact Tracy Anderson at (202) 736-1921 or Jill Lohr Chase at (202) 785-6054.

Sincerely,
(signed)

Suzanne G. Killian
Manager, Oversight