Legal Question in Real Estate Law in New Jersey

Re: kick back

I concur with John, but your facts are sketchy. Exactly what did the broker do, if anything, or were they paid a commission as part of the transaction? If paid a commission, were they actually involved in the transaction, either as listing broker or selling broker, or both? Many times a broker will suggest or recommend a bank to obtain financing, as part of their service to complete the transaction. How was their "fee" reflected in the RESPA statement? More information is needed to give you a specific response.

Re: kick back

The Real Estate Settlement Procedures Act (RESPA) as amended covers �federally related mortgage loans� for one-to-four family residential properties. As a practical matter, the definition of �federally related� loans in the statute is broad enough to include almost all residential mortgage financing.

RESPA 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. RESPA also prohibits fee splitting and receiving unearned fees for services not actually performed. Those practices would otherwise be a means around the statute.

The statute defines �Settlement services� as �any service provided in connection with a real estate settlement including, but not limited to: title searches, title examinations, the provision of title certificates, title insurance, services rendered by an attorney, the preparation of documents, property surveys, the rendering of credit reports or appraisals, pest and fungus inspections, services rendered by a real estate agent or broker, the origination of a federally related mortgage loan (including, but not limited to, the taking of loan applications, loan processing, and the underwriting and funding of loans), and the handling of the processing, and closing or settlement.�

So, the short answer to your question is that it is a violation of RESPA for a lender to give a kickback to a real estate broker for steering loans to the lender and it is a violation of RESPA for the broker to accept the kickback.

If you have been damaged by a violation that that provision of RESPA, you have one year to file suit. You can also report practices that violate RESPA to:

Director, Office of RESPA and Interstate Land Sales

US Department of Housing and Urban Development

Room 9154

451 7th Street, SW

Washington, DC 20410