Key Step Toward RESPA Home Warranty Win

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Legislation passed by the U.S. House of Representatives Wednesday clarifies that home warranties are not a settlement service under the Real Estate Settlement Procedures Act (RESPA). For nearly two decades, the U.S. Department of Housing and Urban Development permitted real estate professionals to earn compensation for selling home warranties. The agency in 2008 reversed this position in an informal letter, and then later in an interpretive rule, creating confusion and triggering lawsuits. This week’s House-passed bill, the “RESPA Home Warranty Clarification Act,” H.R. 2446, sponsored by Reps. Judy Biggert (R-Ill.) and Lacy Clay (D-Mo.), could end the litigation by providing certainty to real estate professionals, home warranty companies, and consumers that the warranties are not a settlement service regulated under RESPA. NAR is working to get the legislation taken up in the Senate.

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