I thought someone had already posted this, but I can find it.  I recently read a blog where it appears that someone misinterpreted Section 9.  That really isn't surprising because the paraphrased version on HUD's Web site is a bit imprecise.

As Steve mentioned, this is what appears on HUD's Web site:

Section 9 of RESPA prohibits a seller from requiring the home buyer to use a particular title insurance company, either directly or indirectly, as a condition of sale. Buyers may sue a seller who violates this provision for an amount equal to three times all charges made for the title insurance.

However, here is the actual statute:

No seller of property that will be purchased with the assistance of a federally related mortgage loan shall require directly or indirectly, as a condition to selling the property, that title insurance covering the property be purchased by the buyer from any particular title company. (12 USCS § 2608)

The language of the statute is also on HUD's Web site, though it is much harder to find.  For most purposes, the paraphrased version is fine.  However, from reading the statute it is clear that it only applies where the buyer is paying for the title insurance.  And, of course, as with all RESPA rules and regulations, it only applies when there is a federally related loan involved.

Best,
Robert A. Franco
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