Comments on: Understanding RESPA Section 8 Violations

By: AgentGenius

AgentGenius — Sat, 05 Nov 2011 08:30:49 +0000

Understanding RESPA Section 8 Violations http://t.co/8rlvkGDA via @AGBeat

By: Manny Gonzalez

Manny Gonzalez — Sat, 05 Nov 2011 07:50:41 +0000

Understanding RESPA Section 8 Violations http://t.co/8rlvkGDA via @AGBeat

By: AgentGenius

AgentGenius — Sat, 05 Nov 2011 03:19:23 +0000

Understanding RESPA Section 8 Violations http://t.co/5EKgotBu via @AGBeat

By: Denise R. Scolaro

Denise R. Scolaro — Fri, 04 Nov 2011 22:43:55 +0000

Understanding RESPA Section 8 Violations http://t.co/5EKgotBu via @AGBeat

By: Katherine

Katherine — Mon, 05 Sep 2011 15:25:24 +0000

For whatever reason, this blog post is making the rounds again nearly 2 years later! Great discussion.
My question is this. As I read RESPA, I understand it means no items of value to un-licensed people for REFERRALS. What about a closing gift for your own client? Is giving your first time home buyer a Lowe’s gift card so they can buy paint a RESPA violation? Apparently that’s what someone in my office is interpreting as an issue.
What’s your take on gifts to actual clients, not the person who referred them?

By: Kim-Marie Mullin

Kim-Marie Mullin — Mon, 01 Aug 2011 18:59:54 +0000

Understanding RESPA Section 8 Violations http://t.co/DectUIS via @AgentGenius #realestate #respa

By: mariana

mariana — Wed, 20 Oct 2010 23:13:21 +0000

Please share where you are getting this information. Thank you.

By: Christopher Rodriguez

Christopher Rodriguez — Wed, 20 Oct 2010 22:51:05 +0000

It is perfectly legal for an unlicensed friend or family member to receive a “finder’s fee” for referring real estate clients to you and being paid through or after the closing from your real estate commissions. Using the term Referral fee is incorrect as this is the term used when a licensed broker refers/pays to a licensed broker. Paying a finders fee from real estate commissions earned in no way violates section 8 of RESPA

By: Mariana Wagner

Mariana Wagner — Wed, 23 Dec 2009 02:25:09 +0000

Jim and Dan – Thank you for your comments. If I were you, I would check out this site: http://www.hud.gov/offices/hsg/ramh/res/respamor.cfm and contact a HUD official who can answer your questions better than I could.

By: Dan Wilkewitz

Dan Wilkewitz — Mon, 21 Dec 2009 19:11:52 +0000

Couple of areas I am working through and would appreciate input on:

1) Practical difference between real estate agents and mortgage brokers in RESPA
What I am confused about is the difference between the real estate license law and the mortgage broker license law. Both categories of activity are regulated by DORA and also RESPA (for residential deals). But there seems to be a stark difference that I cannot find actual, literal regulation to support the difference on.

Licensed real estate agents share in commission on a regular basis. This is not frowned upon, nor prosecuted, even though one agent may do a disproportionate amount of work on a deal. If real estate broker A refers a client to real estate broker B, Broker A can be compensated at whatever level the two agents have agreed upon. They can work for different brokerages and might even be from different states. Sometimes the referring agent does no more than make a phone call to refer the client, though usually there is some measure of follow up and involvement.

I am completely aware of (and compliant to) that if a mortgage broker were to pay a referral fee to a real estate agent that this would violate section 8. Likewise, a title company cannot compensate real estate agents or mortgage brokers for referrals. These have been prosecuted vigorously by HUD. This seems to center around the cross-category payment of referral fees.

What I am unclear on is why real estate agents can make and take referrals within their own profession with no concern, while mortgage brokers, similarly licensed and regulated, are apparently not able to do so?

2) Difference between simple referral (“unearned fees”) and sharing the workload of services
Section 8 is specific in its distinction between simple referrals and payment for services actually performed. I understand that the focus is on unearned fees. But what if two licensed mortgage brokers each accomplished sufficient items on HUD’s list of services to qualify to earn commission? What specific violation would occur if neither broker was receiving a referral fee, but rather being compensated for actual work performed in originating and competing the transaction on behalf of a client?

Thanks for any information you can provide on the two items above.