Are networking groups a violation of RESPA kickback/referral fee law?

By
Mortgage and Lending with AmeriFirst Financial, Inc. NMLS#222444

As someone who teaches continuing education for Mortgage Loan Officers, RESPA is always a hot topic of the group.  In one of my classes as I explained what a Section 8 RESPA violation was, it dawned on me... are networking groups like BNI, Le Tip, etc a RESPA violation because we actually pay a fee with the sole purpose of a referral?  And in some cases like BNI and I'm sure other networking groups, where they only allow one person per profession per chapter/group? Accepting or receiving anything of value whether monetary or in the form of service is a direct violation of RESPA.  Basically all we can do is to send a thank you card.  There is no minimum dollar amount that is acceptable.  But in the case of the networking group, we are paying a fee in exchange for a referral and some of those members in the group fall under respa rules.  

While some may think this is a joke, a violation of RESPA is very serious and affects both parties involved, the giver and the receiver.  Penalties in a criminal case could be fines up to $10,000, one year in prison or both and in a civil law suit a violater may be liable up to 3 times the amount the person was charged for the service.  So it's something very serious to consider.  

 I have passed this question on to my compliance department and will post the answer once I get it.  But in the interim, I'm curious as to your opinion?  What do you think?

Posted by

Amerifirst Financial

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JAYNE COMBS
Sr. Mortgage Loan Officer
NMLS# 222444

jcombs@amerifirst.us

www.jcombs.amerifirst.us


(661) 965-0088 Cell
jcombs@firstcal.net

 

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Rainmaker
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Lanre-"THE REAL ESTATE FARMER" Folayan
Keller Williams Select Realtors-Buy a home in Washington DC. Sell a home in Washington DC - Bowie, MD
I don't make promises.I deliver results.SOLD HOMES

I definitely suggested this one for a feature. I am in Networking groups. BUT THEY ARE ALL ONLINE. So I am curious to find out what the brilliant minds here have to say.

Dec 19, 2012 02:30 AM #1
Rainmaker
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Mike & Eve Alexander
Buyers Broker of Florida - Orlando, FL
Exclusively Representing ONLY Orlando Home Buyers

My opinion:  You are paying a fee to belong to a networking group in the hopes of getting a referral...you are not paying a kickback to someone who just gave you a referral.

No violation.

Most agents in Florida take illegal kickbacks (no, I am not one) from title companies.  One title company paid $4.5 million in penalties for illegal kickbacks to real estat agent....what happened to the agents? NOTHING! 

RESPA no longer has the manpower to go after this type of small stuff.

Eve in Orlando

Dec 19, 2012 08:39 AM #2
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Rainmaker
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Jayne Combs NMLS#222444

Loan Officer & Cert. Divorce Lending Professional
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