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Riley comments on the Carter decision’s affect on compliance standards
"The aftermath of the Carter decision: Now what?", RESPA News Monthly
Francis X. Riley, III, a partner and vice chair of the Litigation Department, was quoted in this article in the July 2010 edition of RESPA News Monthly discussing the affects of an Ohio district court’s decision in the Carter case handed down earlier this month, which muddies the compliance waters for affiliated business arrangements (AfBA). The court concluded that the Housing and Urban Development’s (HUD)10 point sham AfBA test “raises serious constitutional difficulties,” as the factors “invite a highly subjective evaluation” and offers no real guidance for companies when it comes to compliance.
Riley said, “If this decision is upheld by the circuit court and/or is followed by other district and circuit courts, we may see more AfBAs that are otherwise operating outside of these guidelines until HUD or the CFPB takes meaningful regulatory action… it may be the ‘foot-in-the-door’ the industry has long desired on the crafting of clear and meaningful standards, through either amicus briefs, if appealed, or through comments to proposed new regulations.”