Wyatt,

While there are plenty of examples to be found of bureaucratic overreach, I do not think that this is one of them, for reasons explained in a blog post I just put up.  In short, I think HUD was merely offering a reasonable framework for evaluating affiliated business as to whether they meet the statutory definition of an affiliated business arrangement in the statute.  The court failed to analyze this definition, and accordingly missed the implicit "fourth requirement" within it-- namely, that the affiliated business actually provide the settlement services (as opposed to one of its owners providing the service).  I also think that its interpretation is close to what legislators had in mind when they passed these provisions-- I do not think Congress intended to allow sham affiliated business arrangements. 

So, this was not a case where an agency created a whole new requirement that was absent in the statute, despite what the court said.  If that would have happened, I'd agree that it would be up to Congress to amend the law.  Nor do I think that HUD's criteria for evaluation were incomprehensible.  While HUD did not provide a bright-line test, the underlying principles of HUD's criteria were clear: the more insubstantial, dependent, and/or one-sided an arrangement was, the more likely it would be determined a sham.