Ask the Judge - RESPA questions - Do you know the answers?
Are you in need for a refresh course on what is allowed or not allowed under RESPA rules and regulations?
Read the blog below where Anna 'Banana' Kruchten explains some of the rules. Be sure to understand the new rules and regulations so that you are not in violation under RESPA. The next time you receive some extra bonus from a lender, determine if it is for referring or if it is just for doing business with the lender.
Ask the Judge - RESPA questions - Do you know the answers?
Are you up to speed with the RESPA rules and regulations?
Today in a CE class there were quite a few real estate professionals that didn't know the answers to one or more of the following questions. See how many questions you can answer and bone up on the ones that you're not quite sure of. It's important to know the RESPA rules and regulations.
1. Can a lender set up a contest for real estate agents under which the agent who provides the lender with the most business will win a trip to Hawaii?
2. Can a lender give a borrower an incentive, such as a chance to win a trip or a rebate, for doing business with the lender?
3. Can a mortgage banker and a real estate broker advertise their services together, for example on the same brochure or newspaper advertisement?
4. Under RESPA a real estate professional may give in return for the referral of a real estate settlement service business: a. a thank you, b. tickets to a sporting event, c a gift card for $25.
5.RESPA allows title companies to provide Realtor: a. $50 for every client referred to the title company by the real estate professional, b. an entry into a contest to win a car for every $1000 in premiums paid by the real estate professional's clients or c. Notepads that have been imprinted with the title company's name and phone number.
6. A real estate broker pays it's real estate agents $20 for each referral the agents make to the real estate brokers affiliated mortgage company. Is this a violation of Section 8 of RESPA?
Answers!
1.No. Under RESPA, the trip itself and even the opportunity to win the trip, would be a thing of value given in exchange for the referral of business.
2. RESPA does not prohibit a lender or other settlement provider from giving the borrower an incentive for doing business with them as long as the incentive is not based on the borrower referring business to the lender.
3. Nothing in RESPA prevents joint advertising. However, if one party is paying less than a pro-rata share for the brochure or advertisement, there could be a RESPA violation.
4. a. a thank you
5. d. notepads that have been imprinted with the title company's name and phone number
6. Yes, that is a violation of RESPA. Although RESPA provides an exception for payments make from an employer to its employees, payments between a real estate broker and it's real estate agents do not qualify for this exception. Real estate agents are considered independent contractors, rather than employees of the real estate broker. As a result, the $20 payments described in the question constitute payments in return for the referral of business in violation of RESPA.
Ask the Judge - RESPA questions - Do you know the answers?
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Anna 'Banana' Kruchten
Owner/Broker, CRB, CRS, GRI
ADRE Certified Real Estate InstructorPhoenix Property Shoppe
602-380-4886Search for Phoenix Area Homes Here
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