RESPA SECTION 8

1. RESPA � SECTION 8 Guidelines VS Settlement Actions Bob to do Introduction materialBob to do Introduction material

2. RESPA�s 10 Point Test Initial Capital Employee Staffed Manage Own Affairs Office Space Substantial Services Internal vs External Independent Outsourcing Services at Market Value Competing for Business Exclusivity KenKen

3. RESPA�s 10 Point Test - # 1 Initial Capital Employee Staffed Manage Own Affairs Office Space Substantial Services Internal vs External Independent Outsourcing Services at Market Value Competing for Business Exclusivity Does the new entity have sufficient initial capital and net worth, typical in the industry, to conduct the settlement service business for which it was created? KenKen

4. RESPA�s 10 Point Test - # 2 Initial Capital Employee Staffed Manage Own Affairs Office Space Substantial Services Internal vs External Independent Outsourcing Services at Market Value Competing for Business Exclusivity Is the new entity staffed with its own employees for the services it provides? Or does it have �loaned� employees from the parent provider? KenKen

5. RESPA�s 10 Point Test - # 3 Initial Capital Employee Staffed Manage Own Affairs Office Space Substantial Services Internal vs External Independent Outsourcing Services at Market Value Competing for Business Exclusivity Does the new entity manage its own business affairs? Or is an entity that help create the new entity running the new entity for the parent provider making the referrals? KenKen

6. RESPA�s 10 Point Test - # 4 Initial Capital Employee Staffed Manage Own Affairs Office Space Substantial Services Internal vs External Independent Outsourcing Services at Market Value Competing for Business Exclusivity Does the new entity have an office for business which is separate from one of the parent providers? If the new entity is located at the same business address, does the new entity pay fair market value rent for facilities furnished? KenKen

7. RESPA�s 10 Point Test - # 5 Initial Capital Employee Staffed Manage Own Affairs Office Space Substantial Services Internal vs External Independent Outsourcing Services at Market Value Competing for Business Exclusivity Is the new entity providing substantial services, i.e., the essential functions of the real estate settlement service, for which it receives a fee? Does it incur the risks and receive the rewards of any comparable enterprise operating in the market place? KenKen

8. RESPA�s 10 Point Test - # 6 Initial Capital Employee Staffed Manage Own Affairs Office Space Substantial Services Internal vs External Independent Outsourcing Services at Market Value Competing for Business Exclusivity Does the new entity perform substantial services itself? Or does it contract out part of the work? If so, how much of the work is contracted out? KenKen

9. RESPA�s 10 Point Test - # 7 Initial Capital Employee Staffed Manage Own Affairs Office Space Substantial Services Internal vs External Independent Out-sourcing Services at Market Value Competing for Business Exclusivity If the new entity contracts out some of its essential functions, does it contract services from an independent third party? Or are the services contracted from a parent, affiliated provider or an entity that help create the new entity? KenKen

10. RESPA�s 10 Point Test - # 8 Initial Capital Employee Staffed Manage Own Affairs Office Space Substantial Services Internal vs External Independent Outsourcing Services at Market Value Competing for Business Exclusivity If the new entity contracts work to another party, does the payment bear a reasonable relationship to the value of the services received? Or is the contractor providing services at a charge such that the new entity is receiving a �thing of value�? KenKen

11. RESPA�s 10 Point Test - # 9 Initial Capital Employee Staffed Manage Own Affairs Office Space Substantial Services Internal vs External Independent Outsourcing Services at Market Value Competing for Business Exclusivity Is the new entity actively competing in the market place for business? Does the new entity receive or attempt to obtain business from other than one of the settlement service providers that created the new entity? KenKen

12. RESPA�s 10 Point Test - # 10 Initial Capital Employee Staffed Manage Own Affairs Office Space Substantial Services Internal vs External Independent Outsourcing Services at Market Value Competing for Business Exclusivity Is the new entity sending business exclusively to one of the settlement service providers that created it? Or does the new entity send business to a number of entities, which may include one of the providers that created it? KenKen

13. Settlement Agreement Recitals Whereas, �.. RESPA provides for, prohibits and determines etc�.etc�etc� Whereas, the Dept. has completed an investigation��.. Whereas, Respondents have cooperated with HUD�s investigation. Whereas, Respondents do not agree with HUD�s determinations Whereas, this shall not constitute admission of liability � fault�.. Whereas, the parties desire to avoid further expense�.. Yadda, Yadda, Yadda Whereas the Dept. has determined that the Respondents have engaged in activities that constitute a sham business arrangement in violation of the anti-kickback provisions of Section 8(a) RESPA as evidenced by the following findings: BobBob

14. No managerial authority over operations Share the same office space and equipment No employees on its payroll Does not have its own office space, telephone number, fax number, or email address Does not have an official lease agreement Insufficient Capitalization Does not perform core title services or any substantive real estate settlement services Outsources all of its work exclusively Has an exclusive non-competitive arrangement Does not actively compete for business in the marketplace Received large percentage of the title premium for performing little or no title work BobBob

15. NOW THEREFORE��. Respondents agree to comply with all provisions of RESPA. Respondents agree to terminate all operations of the following title agencies within �x� days� final policies within �x� days. Respondents agree, for three years from the date of this agreement, to operate, and/or hold an interest directly or indirectly, in no more than a total of �x� title agencies BobBob

16. At all times in the future, any title agencies formed, owned, or operated by Respondents or in which Respondents have any interest, will be operated in accordance with the following terms: BobBob

17. INITIAL CAPITALGuideline vs Settlement Does the new entity have sufficient initial capital and net worth, typical in the industry, to conduct the settlement service business for which it was created? ���� will have sufficient initial and operating capital and net worth to conduct the settlement services business for which it was created. BobBob

18. EMPLOYEE STAFFEDGuideline vs Settlement Is the new entity staffed with its own employees for the services it provides? Or does it have �loaned� employees from the parent provider? �..�.� will have at least 1 full-time employee that is not shared with another entity, and will compensate that employee from its own funds. KenKen

19. MANAGE OWN AFFAIRSGuideline vs Settlement Does the new entity manage its own business affairs? Or is an entity that helped create the new entity running the new entity for the parent provider making the referrals? ���� will manage its own business affairs through its own employees who will be appropriately compensated for management services provided to the company. It will not be managed or controlled by any other entity or person. KenKen

20. OFFICE SPACEGuideline vs Settlement Does the new entity have an office for business which is separate from one of the parent providers? If the new entity is located at the same business address, does the new entity pay fair market value rent for facilities furnished? ���� will have an office for its use in conducting business that is separate and apart from that of any other settlement service provider, and will pay all related costs. KenKen

21. SUBSTANTIAL SERVICESGuideline vs Settlement Is the new entity providing substantial services, i.e., the essential functions of the real estate settlement service, for which it receives a fee? Does it incur the risks and receive the rewards of any comparable enterprise operating in the market place? ���� through its own employees, will provide �core title services� as that term is defined in HUD Policy Statement 1996-4 BobBob

22. INTERNAL VS EXTERNALGuideline vs Settlement Does the new entity perform substantial services itself? Or does it contract out part of the work? If so, how much of the work is contracted out? ���� through its own employees, will provide �core title services� as that term is defined in HUD Policy Statement 1996-4 BobBob

23. INDEPENDENT OUTSOURCINGGuideline vs Settlement If the new entity contracts out some of its essential functions, does it contract services from an independent third party? Or are the services contracted from a parent of affiliated provider or an entity that help create the new entity? ���� will acquire and maintain, its own office equipment, computer, office supplies and other items necessary to provide core title services, and will pay all related expenses. BobBob

24. SERVICES at MARKET VALUEGuideline vs Settlement If the new entity contracts work to another party, does the payment bear a reasonable relationship to the value of the services received? Or is the contractor providing services at a charge such that the new entity is receiving a �thing of value�? ���� will refrain from business practices that provide to it a fee, kickback, or other thing of value in return for the referral of settlement service business. KenKen

25. COMPETING FOR BUSINESSGuideline vs Settlement Is the new entity actively competing in the market place for business? Does the new entity receive or attempt to obtain business from other than one of the settlement service providers that created the new entity? ���� will actively compete in the market place for title insurance business, and will receive at least 40% of its gross revenues from referrals received from parties other than real estate brokers or agents, mortgage brokers, or other settlement service providers with which it has an affiliated relationship. KenKen

26. EXCLUSIVITYGuideline vs Settlement Is the new entity sending business exclusively to one of the settlement service providers that created it? Or does the new entity send business to a number of entities, which may include one of the providers that created it? ���� will not send business exclusively to one or more �preferred� attorneys; nor will any agency partner require that attorneys or other settlement service providers refer business to ��..� as a condition of doing business with it. KenKen

27. Additional Agreement Provisions The percentage interest of each party in the profits of a particular agency will be proportional to that party�s contribution of the capital of the agency. Return on ownership interest to each owner shall be proportional to the percentage of that party�s capital contribution. Each agency will ensure there is full disclosure to borrowers of all affiliated business relationships. Within �x� business days Respondents will remit payment to the United States Treasury in the amount of $xx,xxx�� dollars. HUD agrees to take no other direct or indirect action against Respondents for violations of RESPA based on the facts presently before HUD. BobBob

28. BobBob