So what is all this about RESPA?
If you don't already know, RESPA is an acronym for the Real Estate Settlement Procedure Act, it is a consumer protection statute, passed in 1974.
The purposes of RESPA are
- to help consumers become better shoppers for settlement services and
- to eliminate kickbacks and referral fees that unnecessarily increase the costs of certain settlement services.
To break it down, RESPA is a consumer watch dog, requiring that borrowers are given disclosure in various situations and prohibits practices that increase the end cost of services...RESPA keeps the honest man honest which is good for all of us...but...the inevitable but...this watchful eye also has compromised how real estate agents go about referring their clients to lenders.
Section 8 of RESPA, is one of these sticky wickets that has given pause to how our team provides resources for our valued clients.
Section 8, prohibits anyone from giving or accepting a fee, kickback or anything of value in exchange for referrals of settlement service business involving a federally related mortgage loan. In addition, RESPA prohibits fee splitting and receiving unearned fees for services not actually performed.
So this is good right, keep people honest, right? Okay, so the fee splitting and unearned fees...you can keep people honest in that regard for the most part...
Kickbacks or Exchange for Referrals...not as easy
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