On Wednesday, August 1, 2012, the U.S. House of Representatives passed the RESPA Home Warranty Clarification Act of 2011 (H.R. 2446). The bipartisan legislation is designed to counter an erroneous Department of Housing and Urban Development (HUD) interpretive rule that reversed decades of common understanding about home warranties. Specifically, H.R. 2446 officially removes home warranties from the settlement services restricted under the Real Estate Settlement Procedures Act (RESPA, and in doing so, restates Congress’s intent that warranties are not covered by RESPA.
The legislation amends the Real Estate Settlement Procedures Act of 1974 (RESPA) to state that no prohibited kickback or unearned fee incident to a real estate settlement service involving a federally related mortgage loan shall be deemed to include, or be deemed to have included, homeowner warranties or similar residential service contracts for the repair or replacement of home system components or home appliances.
In the coming months, NAR and its industry partners will continue to work on the legislation with the Senate.