74620 Federal Register / Vol. 75, No. 230 / Wednesday, December 1, 2010 / Rules and Regulations 

Renton, Washington 98057–3356; telephone 

(425) 917–6510; fax (425) 917–6508. Or, 

e-mail information to 9-ANM-Seattle-ACOAMOC-Requests@faa.gov. 

(2) To request a different method of 

compliance or a different compliance time 

for this AD, follow the procedures in 14 CFR 

39.19. Before using any approved AMOC on 

any airplane to which the AMOC applies, 

notify your principal maintenance inspector 

(PMI) or principal avionics inspector (PAI), 

as appropriate, or lacking a principal 

inspector, your local Flight Standards District 

Office. The AMOC approval letter must 

specifically reference this AD. 

Material Incorporated by Reference 

(k) You must use Boeing Service Bulletin 

737–57A1279, Revision 2, dated February 2, 

2010, to do the actions required by this AD, 

unless the AD specifies otherwise. 

(1) The Director of the Federal Register 

approved the incorporation by reference of 

this service information under 5 U.S.C. 

552(a) and 1 CFR part 51. 

(2) For service information identified in 

this AD, contact Boeing Commercial 

Airplanes, Attention: Data & Services 

Management, P.O. Box 3707, MC 2H–65, 

Seattle, Washington 98124–2207; telephone 

206–544–5000, extension 1; fax 206–766– 

5680; e-mail me.boecom@boeing.com; 

Internet https://www.myboeingfleet.com. 

(3) You may review copies of the service 

information at the FAA, Transport Airplane 

Directorate, 1601 Lind Avenue, SW., Renton, 

Washington. For information on the 

availability of this material at the FAA, call 

425–227–1221. 

(4) You may also review copies of the 

service information that is incorporated by 

reference at the National Archives and 

Records Administration (NARA). For 

information on the availability of this 

material at NARA, call 202–741–6030, or go 

to: http://www.archives.gov/federal_register/ 

code_of_federal_regulations/ 

ibr_locations.html. 

Issued in Renton, Washington on 

November 18, 2010. 

Ali Bahrami, 

Manager, Transport Airplane Directorate, 

Aircraft Certification Service. 

[FR Doc. 2010–29792 Filed 11–30–10; 8:45 am] 

BILLING CODE 4910–13–P 

DEPARTMENT OF HOUSING AND 

URBAN DEVELOPMENT 

24 CFR Part 3500 

[Docket No. FR–5425–IA–02] 

Real Estate Settlement Procedures Act 

(RESPA): Home Warranty Companies’ 

Payments to Real Estate Brokers and 

Agents Interpretive Rule: Response to 

Public Comments 

AGENCY: Office of General Counsel, 

HUD. 

ACTION: Interpretive rule; response to 

public comments. 

SUMMARY: On June 25, 2010, HUD issued 

a rule interpreting certain provisions of 

RESPA as applied to the payment of fees 

to real estate brokers and agents by 

home warranty companies. The public 

was invited to comment on the 

interpretive rule. After reviewing and 

considering the comments, HUD 

determined that changes are not needed 

to the interpretive rule. Through this 

document, HUD responds to certain 

questions raised in the comments. HUD 

believes that its response to these 

questions serves to provide additional 

guidance relating to matters covered in 

the interpretive rule and the comments. 

FOR FURTHER INFORMATION CONTACT: For 

legal questions, contact Paul S. Ceja, 

Assistant General Counsel for RESPA/ 

SAFE, telephone number 202–708– 

3137; or Peter S. Race, Assistant General 

Counsel for Compliance, telephone 

number 202–708–2350; Department of 

Housing and Urban Development, 451 

7th Street, SW., Room 9262, 

Washington, DC 20410. For other 

questions, contact Barton Shapiro, 

Director, or Mary Jo Sullivan, Deputy 

Director, Office of RESPA and Interstate 

Land Sales, Office of Housing, 

Department of Housing and Urban 

Development, 451 7th Street, SW., 

Room 9158, Washington, DC 20410; 

telephone number 202–708–0502. These 

telephone numbers are not toll-free. 

Persons with hearing or speech 

impairments may access these numbers 

via TTY by calling the toll-free Federal 

Information Relay Service at 1–800– 

877–8339. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The requirements and prohibitions 

under RESPA apply to residential real 

estate transactions that include a 

federally related mortgage loan. Section 

8 of RESPA prohibits giving and 

receiving ‘‘kickbacks’’ for the referral of 

real estate settlement services, and 

unearned fees, involving real estate 

transactions. Since 1992, HUD’s RESPA 

regulations have defined ‘‘settlement 

service’’ to include ‘‘homeowner’s 

warranties’’. 24 CFR 3500.2(11). While a 

referral of settlement services is not 

compensable under RESPA, a real estate 

broker or agent (or other person in a 

position to refer settlement service 

business) may be compensated for 

services that are actual, necessary and 

distinct from the primary services 

provided by the real estate broker or 

agent, if the services are not nominal, 

and the payment is not a duplicative 

charge. (See 24 CFR 3500.14(b), (c), 

(g)(1), and (g)(3)). 

On June 25, 2010 (75 FR 36271), HUD 

issued an interpretive rule on the 

propriety under Section 8 of RESPA (12 

U.S.C. 2607) of payments to real estate 

brokers and agents from home warranty 

companies (HWCs). The interpretive 

rule concluded: 

(1) A payment by an HWC for 

marketing services performed by real 

estate brokers or agents on behalf of the 

HWC that are directed to particular 

homebuyers or sellers is an illegal 

kickback for a referral under section 8; 

(2) Depending upon the facts of a 

particular case, an HWC may 

compensate a real estate broker or agent 

for services when those services are 

actual, necessary and distinct from the 

primary services provided by the real 

estate broker or agent, and when those 

additional services are not nominal and 

are not services for which there is a 

duplicative charge; and 

(3) The amount of compensation from 

the HWC that is permitted under section 

8 for such additional services must be 

reasonably related to the value of those 

services and not include compensation 

for referrals of business. 

75 FR at 36273. 

HUD received 72 comments in 

response to publication of the 

interpretive rule. HUD reviewed all of 

the comments, and appreciates the 

input and information provided by the 

commenters. Some commenters 

supported the interpretive rule and 

others did not. HUD found that the 

comments that were not supportive of 

its interpretation did not present 

concerns or information that warrant 

any changes to the interpretive rule. 

HUD, however, has identified and is 

responding to seven specific questions 

to provide additional guidance relating 

to matters covered in the interpretive 

rule and the comments. 

II. Questions and Responses 

1. Question: Is a home warranty 

company’s flat fee payment (e.g., 

monthly or annual payment) to a real 

estate broker or agent for marketing a 

home warranty product directly to 

particular homebuyers or sellers a 

permissible payment under section 8 of 

RESPA? 

HUD Response: No, as provided in the 

interpretive rule, payments for 

marketing services directed to particular 

homebuyers or sellers are considered to 

be payments for affirmatively 

influencing their choice of settlement 

service providers and would therefore 

violate section 8 of RESPA as an illegal 

kickback for a referral, regardless of 

whether the payment is made to the 

broker or agent on a ‘‘per transaction’’ or 

a ‘‘flat fee’’ basis. 

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Federal Register / Vol. 75, No. 230 / Wednesday, December 1, 2010 / Rules and Regulations 74621 

2. Question: Is the list of items in 

footnote 2 of the interpretive rule an 

exhaustive list of the services that a real 

estate broker or agent can be legally 

compensated for by a home warranty 

company under section 8 of RESPA? 

HUD Response: No, the footnote itself 

begins with the introduction, ‘‘For 

example’’. The list in the footnote is not 

exhaustive but exemplary of services 

that, in a particular case, may be 

compensable. However, as discussed in 

the interpretive rule, to be compensable 

the services must be services that are 

‘‘actual, necessary and distinct from the 

primary services provided by the real 

estate broker or agent, that are not 

nominal, and for which duplicative fees 

are not charged’’ (see fn.1 of the 

interpretive rule). Referrals of settlement 

service business are not compensable 

services. Therefore, payments made for 

‘‘services’’ that were fabricated to 

disguise a payment to a real estate 

broker or agent for referrals and are not, 

in fact, ‘‘necessary’’ would be illegal 

under section 8 of RESPA. 

3. Question: What is meant by the 

statement in the interpretive rule that 

evidence in support of a determination 

that compensable services have been 

performed by a real estate broker or 

agent may include: ‘‘The real estate 

broker or agent is by contract the legal 

agent of the HWC, and the HWC 

assumes responsibility for any 

representations made by the broker or 

agent about the warranty product.’’ 

HUD Response: While not conclusive, 

the fact that a home warranty company 

is willing to be legally committed by the 

work and representations of a real estate 

broker or agent who is compensated by 

the HWC for performing services is one 

indicator that those services provided 

are ‘‘actual, necessary and distinct’’ and 

not nominal—i.e., that actual work is 

being performed by the real estate 

broker or agent for which the home 

warranty company is willing to assume 

liability. Specifically, such a legal 

relationship indicates that the HWC has 

worked with the real estate broker or 

agent closely enough to understand the 

value of the services performed by the 

broker or agent, and to be confident 

enough of the broker’s or agent’s 

services and representations, that the 

HWC is willing to take responsibility for 

those services and representations. 

Conversely however, if in a contract 

with a consumer, for example, the HWC 

disclaims liability for acts and 

representations of the real estate broker 

or agent in connection with the home 

warranty, this may indicate that no 

actual services of value have been 

performed by the real estate broker or 

agent. 

4. Question: Why is it a relevant factor 

in analyzing a potential section 8 

violation that a home warranty 

company’s payment to a real estate 

broker or agent was made under an 

exclusive-representation arrangement? 

HUD Response: Section 8 of RESPA 

prohibits payments for referrals and 

unearned fees. Stated another way, 

referrals are not compensable services 

under section 8. See 24 CFR 3500.14(b). 

HUD’s interpretive rule states that, in 

initially evaluating whether a payment 

from an HWC to a real estate broker or 

agent is a violation of section 8, HUD 

may look at whether the payment is tied 

to an arrangement that prohibits the 

broker or agent from receiving from a 

competitor comparable payment for 

comparable actual services. In other 

words, such an exclusive-representation 

arrangement between the HWC and the 

real estate broker or agent is evidence of 

an unlawful-payment-for-referral 

arrangement whereby the real estate 

broker or agent is only being paid for 

steering customers exclusively to the 

HWC and its products. However, as it is 

further noted in the interpretive rule, if 

it is determined that the HWC’s 

payment is only for compensable 

services, the existence of an exclusiverepresentation arrangement would be 

permissible under section 8. 

5. Question: Does the interpretive rule 

prohibit payments from an HWC to real 

estate brokers or agents for general 

advertising services performed by the 

brokers or agents on behalf of the HWC? 

HUD Response: No. The interpretive 

rule specifically prohibits compensation 

for marketing performed by a real estate 

broker or agent on behalf of an HWC 

when the marketing is directed to 

selling the HWC’s home warranty 

product to particular homebuyers or 

sellers. HUD would evaluate the 

permissibility of compensation 

provided by an HWC to real estate 

brokers or agents for other advertising 

by applying the definition of ‘‘referral’’ 

in § 3500.14(f) of HUD’s RESPA 

regulations. For example, a reasonable 

payment for an advertisement by an 

HWC in a real estate broker’s or agent’s 

publication or on the broker’s or agent’s 

website would not, in and of itself, be 

a payment for a referral under RESPA. 

If the marketing services for which the 

HWC is paying the real estate broker or 

agent are services directed to a 

homebuyer or seller that have the effect 

of ‘‘affirmatively influencing’’ the 

selection by the homebuyer or seller of 

the HWC’s home warranty product in 

connection with the real estate 

settlement, then those marketing 

services would be subject to RESPA’s 

prohibitions on referral payments. 

6. Question: Is a home warranty 

always considered to be a ‘‘settlement 

service’’ for purposes of RESPA 

coverage? 

HUD Response: No. RESPA’s kickback 

and referral fee prohibitions are 

applicable in the context of ‘‘settlement 

services’’, a term that is defined broadly 

under RESPA and HUD’s RESPA 

regulations. RESPA defines ‘‘settlement 

services’’ to include ‘‘any service 

provided in connection with a real 

estate settlement’’ and provides a 

nonexclusive listing of such services (12 

U.S.C. 2602(3)). In its regulations HUD 

has long defined ‘‘settlement service’’ to 

include ‘‘any service provided in 

connection with a prospective or actual 

settlement * * *’’ (24 CFR 3500.2). As 

noted above and in the interpretive rule, 

‘‘homeowner’s warranties’’ have been 

specifically included in HUD’s 

definition of ‘‘settlement service’’ since 

1992 (24 CFR 3500.2(11)). Therefore, 

when a home warranty is ‘‘provided in 

connection with a prospective or actual 

settlement’’, it is a ‘‘settlement service’’ 

under HUD’s regulatory interpretation 

of RESPA. 

In determining whether services 

involving a home warranty are provided 

in connection with a prospective or 

actual settlement, HUD would consider, 

among other things: (i) Whether the 

charge for the home warranty is paid out 

of the proceeds at the settlement; and 

(ii) if the charge is not paid at 

settlement, whether the timing of the 

purchase of and payment for the home 

warranty indicates that the purchase is 

so removed from the settlement that it 

is not provided ‘‘in connection with’’ a 

settlement within the meaning of 

RESPA and HUD’s regulations. Items 

paid in connection with a RESPAcovered transaction, of course, may be 

paid and disclosed on the HUD–1/1A 

settlement statement as paid outside of 

closing (P.O.C.) or through the 

accounting at settlement. 

7. Question: Does the interpretive rule 

apply to situations beyond home 

warranty company payments to real 

estate brokers and agents, for example to 

payments by other settlement service 

providers to real estate brokers and 

agents? 

HUD Response: The interpretive rule 

is specifically directed to home 

warranty company payments to real 

estate brokers and agents. However, the 

analysis in the interpretive rule is based 

on an interpretation of the RESPA 

statute and HUD’s existing regulations, 

which analysis may be applicable to 

payments made by other settlement 

service providers to real estate brokers 

or agents. 

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74622 Federal Register / Vol. 75, No. 230 / Wednesday, December 1, 2010 / Rules and Regulations 

III. Confirmation of June 25, 2010, 

Interpretive Rule 

Again, HUD appreciates the input and 

information provided by the members of 

the public and representatives of 

industry who responded to HUD’s 

solicitation of public comment on the 

June 25, 2010, interpretive rule. After 

consideration of the comments, HUD 

confirms its June 25, 2010, 

interpretation of certain provisions of 

RESPA as applied to the payment of fees 

to real estate brokers and agents by 

home warranty companies. The 

interpretive rule therefore stands 

without change. 

Finally, some commenters asked 

whether the interpretive rule has 

prospective or retroactive effect. An 

interpretive rule does not change 

existing law. As noted in the concluding 

paragraph of the rule, the interpretive 

rule represents HUD’s interpretation of 

its existing regulations. This interpretive 

rule, therefore, does not constitute a 

change in HUD’s interpretation of 

RESPA or the RESPA regulations, but is 

an articulation of HUD’s interpretation 

of RESPA and the implementing 

regulations that specifically applies to 

home warranty company payments to 

real estate brokers and agents. 

Authority: 12 U.S.C. 2601–2617; 42 U.S.C. 

3535(d). 

Dated: November 23, 2010. 

Helen R. Kanovsky, 

General Counsel. 

[FR Doc. 2010–30243 Filed 11–30–10; 8:45 am] 

BILLING CODE 4210–67–P 

PENSION BENEFIT GUARANTY 

CORPORATION 

29 CFR Part 4044 

Allocation of Assets in SingleEmployer Plans; Valuation of Benefits 

and Assets; Expected Retirement Age 

AGENCY: Pension Benefit Guaranty 

Corporation. 

ACTION: Final rule. 

SUMMARY: This rule amends Pension 

Benefit Guaranty Corporation’s 

regulation on Allocation of Assets in 

Single-Employer Plans by substituting a 

new table for determining expected 

retirement ages for participants in 

pension plans undergoing distress or 

involuntary termination with valuation 

dates falling in 2011. This table is 

needed in order to compute the value of 

early retirement benefits and, thus, the 

total value of benefits under a plan. 

DATES: Effective Date: January 1, 2011. 

FOR FURTHER INFORMATION CONTACT: 

Catherine B. Klion, Manager, Regulatory 

and Policy Division, Legislative and 

Regulatory Department, Pension Benefit 

Guaranty Corporation, 1200 K Street, 

NW., Washington, DC 20005, 202–326– 

4024. (TTY/TDD users may call the 

Federal relay service toll-free at 1–800– 

877–8339 and ask to be connected to 

202–326–4024.) 

SUPPLEMENTARY INFORMATION: Pension 

Benefit Guaranty Corporation (PBGC) 

administers the pension plan 

termination insurance program under 

Title IV of the Employee Retirement 

Income Security Act of 1974 (ERISA). 

PBGC’s regulation on Allocation of 

Assets in Single-Employer Plans (29 

CFR part 4044) sets forth (in subpart B) 

the methods for valuing plan benefits of 

terminating single-employer plans 

covered under Title IV. Guaranteed 

benefits and benefit liabilities under a 

plan that is undergoing a distress 

termination must be valued in 

accordance with subpart B of part 4044. 

In addition, when PBGC terminates an 

underfunded plan involuntarily 

pursuant to ERISA section 4042(a), it 

uses the subpart B valuation rules to 

determine the amount of the plan’s 

underfunding. 

Under § 4044.51(b) of the asset 

allocation regulation, early retirement 

benefits are valued based on the annuity 

starting date, if a retirement date has 

been selected, or the expected 

retirement age, if the annuity starting 

date is not known on the valuation date. 

Sections 4044.55 through 4044.57 set 

forth rules for determining the expected 

retirement ages for plan participants 

entitled to early retirement benefits. 

Appendix D of part 4044 contains tables 

to be used in determining the expected 

early retirement ages. 

Table I in appendix D (Selection of 

Retirement Rate Category) is used to 

determine whether a participant has a 

low, medium, or high probability of 

retiring early. The determination is 

based on the year a participant would 

reach ‘‘unreduced retirement age’’ (i.e., 

the earlier of the normal retirement age 

or the age at which an unreduced 

benefit is first payable) and the 

participant’s monthly benefit at 

unreduced retirement age. The table 

applies only to plans with valuation 

dates in the current year and is updated 

annually by the PBGC to reflect changes 

in the cost of living, etc. 

Tables II–A, II–B, and II–C (Expected 

Retirement Ages for Individuals in the 

Low, Medium, and High Categories 

respectively) are used to determine the 

expected retirement age after the 

probability of early retirement has been 

determined using Table I. These tables 

establish, by probability category, the 

expected retirement age based on both 

the earliest age a participant could retire 

under the plan and the unreduced 

retirement age. This expected retirement 

age is used to compute the value of the 

early retirement benefit and, thus, the 

total value of benefits under the plan. 

This document amends appendix D to 

replace Table I–10 with Table I–11 in 

order to provide an updated correlation, 

appropriate for calendar year 2011, 

between the amount of a participant’s 

benefit and the probability that the 

participant will elect early retirement. 

Table I–11 will be used to value benefits 

in plans with valuation dates during 

calendar year 2011. 

PBGC has determined that notice of 

and public comment on this rule are 

impracticable and contrary to the public 

interest. Plan administrators need to be 

able to estimate accurately the value of 

plan benefits as early as possible before 

initiating the termination process. For 

that purpose, if a plan has a valuation 

date in 2011, the plan administrator 

needs the updated table being 

promulgated in this rule. Accordingly, 

the public interest is best served by 

issuing this table expeditiously, without 

an opportunity for notice and comment, 

to allow as much time as possible to 

estimate the value of plan benefits with 

the proper table for plans with valuation 

dates in early 2011. 

PBGC has determined that this action 

is not a ‘‘significant regulatory action’’ 

under the criteria set forth in Executive 

Order 12866. 

Because no general notice of proposed 

rulemaking is required for this 

regulation, the Regulatory Flexibility 

Act of 1980 does not apply (5 U.S.C. 

601(2)). 

List of Subjects in 29 CFR Part 4044 

Pension insurance, Pensions. 

■ In consideration of the foregoing, 29 

CFR part 4044 is amended as follows: 

■ 1. The authority citation for part 4044 

continues to read as follows: 

Authority: 29 U.S.C. 1301(a), 1302(b)(3), 

1341, 1344, 1362. 

■ 2. Appendix D to part 4044 is 

amended by removing Table I–10 and 

adding in its place Table I–11 To read 

as follows: 

Appendix D to Part 4044—Tables Used 

To Determine Expected Retirement Age 

WReier-Aviles on DSKGBLS3C1PROD with RULES