Home : Blogs : Ed Rybczynski : For What it's Worth!

CE Courses Sponsored by Title Companies: We Need to Talk

I've noticed quite a bit of dialog concerning continuing education courses being sponsored by title companies. I'm talking about CE credits for real estate agents. Sound familiar? At first I thought it sounded like a great marketing idea for title companies, but then I got to thinking: are these courses provided for free?

I've asked a couple of friends if they thought it was a RESPA violation and they see a real problem with the practice. A RESPA exception for educational purposes would make sense, but I don't know of one.

RESPA offers a very limited window of opportunity for service providers to market real estate agents for their business. It's equal to $25 per year for each source of business. That's it, there is no more. Anything else is illegal and CE credits cost a great deal more than that.

Unless you know something that I don't know, it's a problem when title companies provide CE courses for free.
The problem exacerbates itself if lunch, valuable presents, etc. are provided. The same rule would apply to lenders providing classes.

I don't claim to be a RESPA expert. I'm just asking a question.

If you're attending CE classes provided by title companies and not paying for the credits: Are you violating RESPA?

I'd like to know your thoughts! Am I wrong?

Note made on December 11, 2007.

I apologize for not participating in this important discussion last night. I logged off after the initial flurry of interest had ended. While I'm glad this post was featured, I didn't expect it to be the case.

Posted by Ed Rybczynski on 12/10/2007 09:43 PM

Comments (82)

respa, title industry, title insurance industry

82 Comments on CE Courses Sponsored by Title Companies: We Need to Talk

DEC

2007

I've attended a lot of CE classes conducted by title company owners. I pay for the classes, standard membership CE fees, to the local board, GCAAR, FCAR or NVAR.

I don't know where "free" came from.

Local associations provide CE classes. It's better to have an attorney provide the course content than agents or brokers. I'm sure the title attorneys that conduct the classes expect to get some settlement business out of it. These are often mandated hours, Fair Housing, Legal Update, etc.

Home inspectors give classes for CE. We pay the CE fee for elective class. It's never free.

Perhaps I misunderstood the question.

I sure hope you are wrong, Ed. Almost ALL of the CE classes in my area are sponsored by title companies - we are talking 99.99% of them. We even get a schedule of classes offered by title companies through our local board.

Lenn

I am strongly of the opinion that title companies, and lenders, are offering continuing education credits to real estate agents for free. Lavish conference rooms are being rented in plush hotels and expensive lunches are provided.

As much as I like the idea, I think it could be a problem!

Lisa

Are the credits offered for free or do the real estate agents cover the expense? That's the question.

Ed, they are all free, but we don't get plush hotels or lunch. It's usually a conference room at a title company office with soft drinks and cookies. The majority of our closings are done by attorneys, not notaries, and they are the ones teaching the CE classes.

Lisa

I don't think that the location is really the key factor. It's just an additional layer of icing on the cake. I would talk to my broker if I were you. If your broker doesn't know of a specific RESPA exception, I would look elsewhere for CE credits that aren't free.

Hi Ed - I have a feeling you're going to find that many of us are in areas where the local title companies do sponsor CE courses. They do in my area, but their form of 'sponsoring' is to provide continental breakfast type stuff and their name on the flyers that go out. Once in awhile, title companies along with mortgage companies, will sponsor a well-known speaker, and I would guess that their 'sponsorship' of those events includes offsetting the actual costs. I haven't been to a 'free' course in some time, at least not that I can recall anyway.

Ann

I understand what you're saying. Do the real estate agents pay per credit or do they leave with credits without paying anything? I think that's the real question.

Happens all the time here. yikes

I just don't know what you're talking about.

Are you saying that the attorneys that teach the CE courses do it for free?

Or, are you saying that the courses for which we get CE credits are free to the members?

I have never received a CE credit that didn't cost me. GCAAR courses are about $40 per 3 credit hours.

I just took an all day course with 3 attorney from Village Settlements that cost me $90.

I don't get any CE credits free to me.

Ed, builders used to HOST (occasionally) the classes- in the model home, to promote the product, providing lunch- I'm not sure, though, that I recall one ever paying the class fees. That's an odd one- if a title company DID offer a course, advertising it as "free credits" (I've never seen it here), I'm sure that they'd be inundated with attendees...

Ed...I do believe you are correct.The next time we get a flyer I will have to look it over more carefully.They are usually at the company itself or at a Bank office....no snacks for us!

It will be a good topic for discussion at our next staff meeting....

Ed, I have taken several CE classes sponsored by title companies. Most are co-sponsored by another entity, ie home warranty provider. Some with no sponsor charge a $10 fee, the proceeds going to different charities. Often, in either case, the title company may provide refreshments. If the refreshments include lunch, the tab is picked up by the co-sponsor. I believe and hope this answers the RESPA issues, what do you think?

BTW, a local title company offers a "free" computer program. When offered this, I challenged them on RESPA compliance. The rep said the attorneys allowed it since there were several advertisments on my screen, hence it was an advertising vehicle, not a gift of value. Again, what do you think?

In response to Lenn...

In Louisiana, the title company attorneys teach the CE classes FREE. I have not paid for CE since I got my license because there are so many approved courses here that are offered at no charge. The Louisiana Real Estate Commission trains the trainer (attorneys), then the attorney trains the agents. I would hope that if this WAS a RESPA violation, our local board would not be sending out emails and faxes with the lists of the available FREE classes.

Interesting discussion.

Ed, It's my experience that the title companies "sponsoring" the class is really just "sponsoring" the coffee and snacks during breaks. It's not actually paying for the instructor or credits for us.

We have not had that much in our area the State association offers classes at the Convention but we pay a registration fee so no issue there but it might be a concern for the situation you are talking about.

I just attended my first CE course that was given for FREE by a title company. All of the others had a fee involved. This free one provided a full course breakfast and refreshments. Problem? I'm not sure. I do know that it was an extremely valuable course.

I just received an invitation - A builder was sponsoring CE classes it was a fraction of the cost. Would this fall under the same RESPA rules?

Hey Ed:

I'm not a RESPA expert - but I would contend that in our area, where there are several "free" options so that a mortgage or title company sponsoring is not a violation. However, if the standard in an area is a fee only arrangement and the fee exceeds $25 - then you might be on a slippery slope. Now a gourmet meal in a fancy hotel with cocktails and the course may get a bit dicey even in the "free" areas.

Ed, What is this "Stockholm Syndrome"? Did it ever occur to you that the HUD is going overboard by declaring every marketing effort a RESPA violation? Come on ED, be on our side.

Personally, I buy my continuing education from a private company and do the entire 45 hours from home. It's cheaper than anything else available, even FREE courses from title companies (because of time and travel considerations). But I wouldn't not take a title company offered course because of RESPA.

I think the "test" of an actual RESPA violation has to be if the thing offered is on a quid pro quo basis. Without strings attached or an actual title order tied to the offering there can't be a violation.

Bill Roberts

Free donuts are okay but free classes are not okay? That would explain a lot. :)

You are correct- it is a RESPA violation.

Here in Washington state our Insurance Commissioner has come down hard on all of these practices. Tens of thousands of dollars fined against companies who broke the rules after a strong warning.

The Title companies must document and charge agents for everything they supply- Farm lists, flyer boxesm, etc. Oh- but not if it is digital. Over-reacted is a common refrain heard from many in the industry. But there were some incredibly bad apples that rotted this barrel. I would not be surprised to see other states to start following suit.

I guess I should just say that there are no more Free CE Classes in our area any longer. Or anything else.

Here in California it would also be a Section 12404 violation under the State of California Department of Insurance Regulations. It is a perfect example of a regulatory body out of control. I fully realize they are trying to protect the consumer, but offering free educational material and programs to Realtors can not hurt the consumers.

Ed,

That isn't going on in my market that I am aware of. The only CE classes I have had available to me have been sponsored by our Board of REALTORS and I've had to pay for them.

I heard that the Insurance Commissioner in Washington State is coming down hard on this issue because he may be running for governor and needs a feather in his cap. But why our feather? Grrr.......

DEC

2007

Ed - I don't have an answer. I have never paid for a CE course. Title companies (prestige partners) offer them free. If somebody is violating RESPA, it is news to me. Now, our broker may have to respond but then they do have more attorneys than carter has liver pills. I have to believe that if they can slip the prestige partner deal past HUD, classes for free is a snap.

In my humble opinion, absolutely YES!.... When it comes to RESPA violations, we should ALWAYS err on the high side, and avoid every appearance or even hint of wrongdoing. To me, this is an obvious violation. We have a local title company whose Sales/Marketing Manager does a lot of clock hour classes for our state association. But he charges for the classes. Everything is very much above board. And he is a really excellent presenter as well...

I forgot to say in my earlier comment-

RESPA says the Title companies are only allowed to spend $25 per agent per year.

That is why it is a violation. Because the service they are paying on our behalf if they pay for a class is worth more than $25. And in some instancea, the worst offenders were paying for some really big things- like taking an entire office to a Mariner's game and hosting them in a skybox fully catered. That is a bit more than $25 per.

I have read a few blog posts that bring to question whether some common practices are RESPA violations. I think the local boards may need additional RESPA training for its members.

I have a simple rule, if it even has a chance of being a violation I simply avoid it.

The classes that I've seen offered in Las Vegas are usually co-promoted between a title company, lender and other organizations. For example, a course on Marketing to the Latino Community was sponsored by First American, Wells Fargo and NAHREP.

Another issue to possibly consider ... While there is definitiely value in our continuing education, the credits are awarded based on time in class, not dollars spent.

This is not available in Westchester. CE courses are offered through our local board and I have to pay for each and every one of them. I know that people actually hunt around for the cheapest way to do things - so if anything were free- there would be a stampede.

Missy - I've learned that it's a common practice. It appears problematic to me.

Lenn - The $90 sounds about right. I'm talking about an instance where the title company pays for everything. The real estate agent simply attends and leaves with credits.

Laurie - I can't see where it wouldn't be a problem.

Joan - I think the topic is worthy of discussion. The practice is so widespread that I assumed that a RESPA exemption existed for continuing education. I'm being told that it doesn't.

Jim - I don't like the sound of either scenario. Each geographic area seems to have a going rate for a continuing education credit. That's the amount that should be paid by members of the audience. Lunch is probably not a problem.

I would not accept a free computer program from a title company. It has real value.

Lisa - Thanks. Please let me know if you learn something that discredits my argument. I'll happily admit that I'm wrong, if that's the case. I'm afraid we might have stumbled upon a common practice that everyone assumes to be compliant when it's not.

Carol - I think that's fine as long as the real estate agents are paying for the credits.

Terry - You're right about the registration fee being a legitimate form of payment for credits.

Karl - I think you can expect invitations to similar courses in the future. Title companies have figured out that CE credits will attract a room full of real estate agents. Naturally, the agents feel a need to reciprocate the favor. Therein lies the problem.

Rebecca - I don't see how it couldn't be a problem. There is still the question of value when the title company is paying for the bulk of the course.

Bill - I do agree with you and I am on your side. No one wants HUD reform more than I do. I want title companies to have the ability to market effectively and legally. Still, we have to deal with RESPA as it's interpreted at this time and its real world implications. RESPA violations are being pursued more vigorously now than at any time in the past. BTW, the HUD police do exist. I've met a number of them.

Frank - I think your analysis is right on target.

Beth - I agree as long as the credits provided are of the same nature as those that can be obtained without cost from other sources. I would not agree if more valuable credits are being offered and being improperly compared to the no cost alternatives. That problematic in my mind.

Sarah - Without a doubt, your state's insurance commissioner has been visibly proactive. Thanks for sharing your opinion.

William - I agree that the consumer benefits and that free education to real estate agents is a good idea. I'm simply commenting on the situation as it exists at this time.

Fran - Thanks. It sounds like the state of California takes these matters seriously.

John

I'm just shaking my head as I type and admitting that I just don't have the answers. I don't think that HUD would agree with the practice. And, we never know when the feds will have a change of temperament and start enforcing infractions without firing a warning shot. Just because HUD is turning its head today doesn't mean that it will tomorrow.

It's a slippery slope we're talking about.

Hey Ed, A few years ago we started paying for these classes. I have not seen a free class in a long time...The whole RESPA deal is a sticky case. The Title companies mostly are the ones wanting to do more.

This was a great post and I think it will bring out some good discussion! :)

Rich - I agree that we always have to err on the high side. Can you imagine the effects if a vindictive reporter were to get a hold of something like this and started a smear campaign? It would be even worse if individual names were mentioned.

For real estate agents, the appearance of impropriety is an impropriety in the court of public opinion.

Randy - I agree with your approach. Why take any chances?

John - While it's true that credits are awarded based on the amount of time spent in a seat, there is still the question of value. Ask yourself: What does a CE credit ordinarily cost in Las Vegas when it's not sponsored by service providers. That, I think, is the question at hand.

Ruthmarie - Free credits are becoming all the rage in many areas. I'm willing to bet that, in time, someone will get burned "big time."

Hi Ed - I guess I didn't write my first comment very clearly. We PAY for the courses and leave with credits. The only form of sponsorship I see in my area, for the most part, is the title companies or lenders bring in the danish, yogurt, juice, etc. In exchange for that, they get their name on the flyer and they are able to pass out some of their marketing materials. But we pay for the courses.

Ann

Hi Steph - Thanks for adding your insight.

Ann - Thanks for clarifying the situation.

We get these free classes also but I have never attended one. I will be parking here as I need CE hours to renew my license soon :)

Renee

Like you, I'm curious to hear what others have to say about this.

That is an interesting topic. One would think that if MREC approves and its co-hosted by GCAR, even with the lunches provided, it should be okay. Nobody teaches anything without MREC's approval.

Suzi

As an example, I'm thinking of the armies of attorneys that work for title insurers. The five major title insurers have gotten themselves into a lot of trouble recently for ignoring RESPA. I think most people don't take RESPA seriously and believe that there are no repercussions for violating its provisions.

It is my experience that this is quite different, state by state, even though the RESPA rules are national. I believe a title company, or other entity (lender, etc.) could sponsor something if it is ADVERTISING and it is offered to anyone (not exclusively). We have free classes in AZ or very inexpensive one that are, in part, underwritten by the sponor

I don't know of any CE classes that are not offered by our local boards. So it appears as though that is not an issue here.

Joeann

I'm certain that the practice has gained traction in many markets. I'm just wondering why it doesn't violate RESPA. This weekend, I sent a number of emails to colleagues who know more about RESPA than I do. I was thinking there must be some glaring provision for education that I should know about. No one has been able to offer a sound justification for the practice from the perspective of RESPA. I don't think it's enough to say that the practice is employed by large players in the industry and is therefor ok. As you know, the federal law supercedes any law that exists at the state level. Also, a continuing education credit is clearly a thing of value.

BTW: I strongly agree with the concept of title companies providing free education to real estate agents and hope that it's legitimate.

Kelly

Illinois regulators seem to have their act together. Earlier this year, I gave a number of presentations there for the title industry and found the experience to be positive overall.

In my current company I haven't seen a free class. I just paid a private company so I could finish off some of my required hours before my next license renewal time. However at my old company the settlement attorneys were offering classes at no charge. Since the courses have to be approved by the State Board I'm surprised this would be an issue but I'm going to send an email off to one of the settlement attorneys that I know offers these classes and see what their take is.

Cindy

Thank you and please let us know the outcome.

Cindy

I have a follow up to your comment. I'm authorized to teach Virginia CE courses for title professionals and attorneys. After a course outline is approved by the state, a rooster of attendees is the only other requirement. Also, most states assess a small administrative fee for each person in attendance.

The state wouldn't know if I charged for the credits or not. It's not an issue from that perspective.

The title companies that I work with are very strict about RESPA and they do sponsor classes so they must be doing it correctly. There is always some sort of loophole.

Micheal

I agree about Kansas being a state with a good track record. Still, it's not enough to assume that everyone is doing it so it must be ok. If you happen to learn of a RESPA exemption, I'd love to hear about it. I think it's ok for the title company to sponsor the event as long as the real estate agents are paying for the individual credits.

I'd be concerned if the seminar was held in an extravagant setting. I'd be particularly concerned if the event was followed by a free round of golf and a cocktail party.

Interesting reading and I would like to know the correct answer. Please tell me where we can check in the RESPA guidelines to find out if it is a violation or not. None of us want to violate RESPA.

Its hard to believe that all these title companies are simply violating RESPA like that. Please keep me updated when you find the section, page and rule number of this violation.

Rosemary

It's more involved than locating a copy of the original law. There's also decades of commentary and interpretation to contend with. I agree that a reasonable mind would conclude that the practice is legitimate since it's become widespread and generally accepted.

Still, I would like to know why and will continue to ask the question until a sensible answer is given. I'm really torn on this one.

Oh don't get me wrong. I think this is a great subject and question to ask. I will come back again and again to see what the final conclusion is and I surely hope we can get an answer that is right, since there seems to be yea and nope it is or is not a violation. We all need to know. Thanks for bringing it up. Good feature.

Bookmarked

Good question, but please! If a title company invites every agent in their zipcode - let's say that's 100 agents - and 20 come, would you count $25 for the 100 or the 20?

Rosemary - I will do my best to keep the issue in the forefront until we find a sensible answer.

Margaret - Good question! I think it's safe to apply the normal RESPA standards to this situation. Namely, the $25 would apply to each individual member of the audience who benefits from the receipt of CE credits.

The only free classes I have seen are by companies trying to entice agents to usesign up for their coahing programs, I have taken a few classes from title co's but had to pay

Michael

Thanks! Practices seem to vary wildly between different areas.

In my area i've never attended or heard of a Title Co doing CE. I've been attending the same CE classess with 2-3 people but NEVER at a Title Co. As you said there could be serious RESPA violations doing it this way.

Robert

Thanks for the insight into practices in your city. While it appears fairly common for title companies to offer CE credits to real estate professionals, the practice seems not to be universal.

Here in California Title companies will cover room and breakfast, but the classes are being paid for by the agents ... the title companies I work with are VERY serious about this to the extent that their name is not even on the flyers that are being passed out.

Allen

It sounds like a reasonable approach to me. Then again, I'm wondering why the title companies wouldn't want to be named on the fliers.

Hi Ed. I know that here in my part of North Texas, any and ALL MCE classes that are "sponsored" by Title Companies are NOT free. We pay for them and they are usually held in the conference room of that title company. IF there are refreshments provided, it is usually doughnuts, cookies, coffee, tea & water. Nothing extravagant.

I know when the RESPA issues first came up, it scared everyone to death. Since that time, there have been great meassures taken to make sure that no one office is singled out and that ALL Realtors in the area receive the same type notices/invitations to these classes.

Thanks for the post. I know that in other parts of the country there are some that are ignoring the RULES.

Kathy

It sounds like a great way to provide and receive continuing education credits. It really does make sense for title professionals to teach some of the courses that are required by real estate agents for license renewal.

Locally, our Board covers the cost of CE classes and the cost of the conference room. The title company does provide breakfast/lunch but it's done under the guise of marketing as they always pitch their services before any freebies. They say this arrangement has been run by legal and given the green light. That's their story anyway.

Jesse or Kathy

It sounds legitimate to me. There's certainly nothing patently unreasonable about the scenario. Fairbanks seems like a nice place to live and work.

Am I glad I got my free 12 hours of CE credit at the Title Co. the last few weeks before the RESPA police starts reading these posts and shuts this practice down.

We know that a real estate professional is prohibited from receiving anything of value for the referral of settlement services. I guess I'll just have to become a part owner and disclose it. Here is my $1.

We are involved in doing CE classes with a number of speakers who charge nothing, and the question our legal counsel always wants to know is are we paying the speaker anything. If we are then we are supplementing the cost of the class and that constitutes a violation. The speakers have been getting smarter. They offer the CE class for free but have a number of vendors there who pay to be present. The title co's seem to only get off with paying for a few cookies etc... and getting to do a short presentation on their services. The speaker is making money off the other vendors and is usually selling a book or something like that to supplement their income.

DEC

2007

Bernie

Neither the drafting of an affiliated business agreement or an attempt to pay for services would work after the fact. Also, continuing education credits have a value much greater than $1 as every licensed professional is aware.

As a title company owner, I was foolish enough to think that the feds weren't serious about every little law. It's easy enough to assume that everyone is doing something or that the HUD police are busy with more serious matters. I was wrong. The feds take every little thing very seriously. My office was eventually raided by HUD police and I eventually spent time in a Fed pen.

My strong advice: Don't knowingly violate federal laws, including RESPA, and don't mess with the feds.

It appears that title companies are breaking the law when paying for CE credits for real estate agents. The real estate agents are equally guilty. Someone will get burned. Someone will be made an example of.

You can keep your $1.

Greg

I've noticed that title insurers are using vendors to offset the cost of their agents seminars. It seems a little less than appropriate to me, but at least the vendors are given a chance to market their products.

I'd have to question any setup where real estate agents receive anything of value without charge and a title company is involved in any way. I don't think I would take a chance with it if I were still in business.

I'm glad you agree with the overall spirit of this post. I'm convinced that RESPA doesn't specifically allow for the provision of free courses when CE credits are involved. I think it would be another matter entirely if the courses were offered only for the sake of professional advancement and credits weren't in the mix. Thanks for commenting.

No, you are not wrong. It has been our understanding that we just can't do that.

Diane

Thank you! I've done a ton of research during the past couple of days and draw the same conclusion as you. It's perfectly legal for a title professional to be a volunteer instructor for a CE course. It's possibly still ok for the title company to provide breakfast or lunch for the entire audience.

It's not ok for the title company to provide the credits without charging appropriately.

Interesting discussion. I find the title company attorneys to be among the most versed in the laws and as such can impart that knowledge to me, making me a better fiduciary in the end. And of course making me more likely to use that company. Hence the issues with RESPA. Guess I'll just continue to get my credits through GCAAR and attend the sessions for the informational value but not for credits.

Josette

Title people are positioned well to teach CE courses. Not only do they understand the laws, title people work on transactions as they're culminated and glean a perspective of the biggest possible picture.

I applaud your willingness to attend courses for the sake of knowledge. I think it's the benchmark of true professionalism.

DEC

2007

Seems like it violates the RESPA guidelines doesn't it ? It probably exceeds the $25 limit. It certainly runs counter to the intent of the rule.

Bill

I have to agree. Typically CE credits cost far more than RESPA's current limit.

DEC

2007

Ed, I wanted to get back to you on this. I attended a CE course on Friday, sponsored by a title company, who brought in a local insurance expert. The free class was held at the title company office and I left with 2 hours CE. I talked to the managing attorney about this discussion thread and she said that their legal department's interpretation is that the classes are open to any agent who signs up and there is no expectation of future business from them, thus no RESPA violation. Do they hope we bring them business? I'm sure they do. But, she said the majority of the agents who attend the free classes are people she has never seen before, worked a deal with or will see again until the next free class is offered. Any thoughts on this from you?

Lisa

I have to tell you that I don't like the explanation offered by the title company. If there is no expectation of future business, why go through the motion? Why spend the money? It would be an exercise in futility. In all honesty, the course was probably a RESPA violation. The title company knows it and is cleverly using words to sidestep the issue.

I'd be cautious in the future.

DEC

2007

It's amazing how, on a subject as important as this, there apparently is no concensus. Great question, though.

Your Myrtle Beach Connection

FEB

2008

"You can keep your $1. "

I will, since in my 17 years in the biz, I've never had to pay for continuing ed., except the mandatory hours. You can go to our associations website and select different title companies educational calendar and pick your classes.

Reading RESPA and numerous investigations by Dr. Gary Lacefield, I was not able to come up with a definitiva answer to your question.

Leave a response…

Name:

Email:
(optional)

Comment:

What does the graphic say?