When we pay referral fees to other agents, isn't that a "kickback" of sorts?
Do you pay referral fees to other lenders?

hey pike!
not at all. truthfully, that has always thrown me for a loop that real estate agents can pay other agents a "referral" fee. i'll get shot for doing that on my side of the fence.

cardinal1,
I asked the question directly to the HUD RESPA Compliance Officer and she said that was the reality! If you do the work you can be paid for it...sounds like that person in your state office needs to actually check with RESPA and not make a guess on their own.

As long as you can verify that the work was completed it is legal.

Maybe not.

http://www.ag.ca.gov/opinions/published/97-901.htm

In my area, we currently have a Realtor whose spouse owns a mortgage company and the Realtor 'works' for them. Our issue is confidentiality. Realtor says "I'm not being an agent today, I'm working for the mortgage company" and asks for information that the agent shouldn't have. THAT gray area is going to get someone in trouble. I don't give out the info.

Referral Fees or Kickback?

My former branch broker, a favorite of FNMA & FHLMC, specified contractors for me to use and award property preservation assignments to.

Upon learning he was taking a 5% overide on trash-out, final maid clean and repairs from vendors and contractors, I confronted him and ask him to stop.

I was subsequently terminated against public policy after 6 years of service and not paid for my last month there, which amounted to some $25K in BPO fees & closed sales commissions.

That was 12 months ago with his attempt to restrain & place a gag order on me and the proceedings, which was thrown out of court.

The trial date is to be set this Thursday. We find almost 1000 REO property files are affected with Lender clients overpaying for work that was not performed. The broker did not do any work so to me there are some (980) fraudulent violations of RESPA on the HUD 1 statements.

Is it a kickback per RESPA or a referral fee similiar to that of Safeguard when they hit their service contractors up for 30% referral fee for assigning them the work?

I wonder what the official RESPA answer on this would be ?

Retsof Yor, please let us know how things turn out for you. Best of luck on Thursday.

The thing that bugs me is when agents or loan officers arrange a "pre-payment" penalty for a client so they can recieve a paycheck from the bank. Many of them don't even disclose the fact that the borrower doesn't NEED the penalty. The borrower just assumes it's required to refinance. It's written in the contract that they will recieve money from the bank, but the agent doesn't bother to discuss it or point it out. And since the contract is so long and full of "legalize" language, most borrowers just sign and don't question it.

Someone's going to burn the banks for pulling that one.....

Loan officers have no reason to intentionally put a prepayment penalty on a mortgage. Prepayment penalties are paid to the bank, not the loan officer. Most sub-prime (bad credit) mortgages will usually have prepayment penalties because the lenders know the borrower will refinance out of the mortgage as soon as they can, so the only way they can make any money is to assess a prepayment penalty. Sometimes borrowers want prepayment penalties because they can get a lower interest rate.

With that said, sometimes bad loan officers do not properly disclose that some loans may have a prepayment penalty. However, consumers need to take more responsibility for knowing what they are getting.

Would it be OK to have Real Estate related sites that advertise / profit from affiliate programs for lenders? For example, a city directory which promotes local businesses and also has access to the MLS, but is operated by a licensed Real Estate agent.

BTW, I am a new agent, and this is my first post. I have so much to learn...

Welcome to the forum!

That is a great question. I think if the owner of the site is only receiving payment for the ad space and the ad is clearly marked as an ad (as apposed to an endorsement), I see no conflict.

Here is a legal point of view about RESPA & payments.
http://www.frascona.com/resource/jag_daf705respa1.htm

How can you check something out with RESPA when it isn't anything more than an acronym for a federal statute. Real Estate Settlement Procedures Act.

Try checking things out through HUD as HUD enforces this law.

NewsFlash Kathy!

HUD is the enforcement body but HUD has a RESPA Compliance Department and it is staffed by RESPA Compliance Officers whose sole job is RESPA. That is how it is Done. I have on several occassions spoken to the RESPA Compliance Officer, How about you? Maybe you should know your facts before attempting to correct a post that you have no knowledge of!

I can't figure out what your arguement is Paul....I mean if you read what you wrote in response to what I wrote and then compare it to what I wrote aren't they pretty much saying the same thing? ......what's the problem?!

No don't tell me....I really don't care to communicate with you because you obviously have your panties in a twist for some reason and I am obviously the one who twisted them.