Legal Question in Real Estate Law in California

Can Loan Officers offer referral fees to real estate agents?

I am a loan officer and I have been developing an affiliate network of real estate agents on a commission basis. I am offering $500 per closed loan up to five loans. On the sixth loan, the referral fee raises to $1000. These realtors will recieve a 1099 at the end of the year, assuming one is required. I am concerned because a friend just brought Section 8 of RESPA to my attention.

Section 8 reads as follows,''Section 8 of RESPA prohibits anyone from giving or accepting a fee, kickback or any thing 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.''

My question is two part. One, is what I am doing illegal? Two, does this regulation only apply to federally funded home loans, like a FHA or VA loan? I am concerned and wanted to get an answer before I roll out this program.


Asked on 2/19/06, 11:41 am

1 Answer from Attorneys

Lyle Johnson Bedi and Johnson Attorneys at Law

Re: Can Loan Officers offer referral fees to real estate agents?

Your license and career are resting on the answer to this question. No matter how knowlegable and compentent the attorney an answer to an internet question cannot be accurately given. With the amount of money on the line you should contact an attorney and consult with the attorney regarding the matter.

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Answered on 2/21/06, 1:21 am


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