[mbmills]

With the rising rate environment and lack of housing inventory, mortgage loan officers are finding it difficult to fill their pipelines. So, they are looking for ways to generate business, including increasing their interactions with realtors. We know that RESPA Section 8 prohibits giving or accepting a fee, kickback, or thing of value for referrals of business, but are looking for some guidance as to the permissibility of the following activities.

Attend realtor open houses (uninvited) to introduce themselves and explain mortgage products/programs available to the realtor.

Attend realtor open houses (with an invite from the realtor) to be available to provide financing information or a pre-qualification to potential homebuyers.

Attend realtor open houses (with an invite from the realtor) as above, but also provide a flyer to potential homebuyers that contains information about the listing and realtor along with contact information for the mortgage loan officer and examples of financing options. (I’m of the opinion that the flyer is prohibited because there is no shared cost.)

Call on all realtor offices that are members of the local realtor association to provide information about products/programs along with food and/or bank promotional items (i.e., pens, notepads, key chains, etc.).

Host Lunch & Learn events about mortgage products/programs with invitations to all members of the local realtor association.

Participate in a homebuyer education class hosted by a realtor.

Provide training at the request of a realtor office or local realtor association.

Serve on a committee at the local realtor association.

[jholzknecht]

Good questions. Your concern is well placed. The most recent guidance on the topic was published by the CFPB on October 7, 2020. The guidance was in the form of fourteen Frequently Asked Questions (FAQs) on the RESPA Section 8 issues (https://www.consumerfinance.gov/policy-compliance/guidance/mortgage-resources/real-estate-settlement-procedures-act/real-estate-settlement-procedures-act-faqs/). Of course, the guidance doesn’t specifically address your questions. I share my thoughts on your questions below. You should consider getting a legal opinion from your bank’s legal counsel on these issues.

1. Attend realtor open houses (uninvited) to introduce themselves and explain mortgage products/programs available to the realtor.
• An essential element of a Section 8 violation is that a fee or a thing of value is paid to the referring party. It does not appear that a fee or thing of value is provided to the referring party.

2. Attend realtor open houses (with an invite from the realtor) to be available to provide financing information or a pre-qualification to potential homebuyers.
• It does not appear that a fee or thing of value is provided to the referring party.

3. Attend realtor open houses (with an invite from the realtor) as above, but also provide a flyer to potential homebuyers that contains information about the listing and realtor along with contact information for the mortgage loan officer and examples of financing options. (I’m of the opinion that the flyer is prohibited because there is no shared cost.)
• The flyer may be considered a thing of value for the realtor.

4. Call on all realtor offices that are members of the local realtor association to provide information about products/programs along with food and/or bank promotional items (i.e., pens, notepads, key chains, etc.).
• The food and/or bank promotional items might be considered as things of value to the realtor.

5. Host Lunch & Learn events about mortgage products/programs with invitations to all members of the local realtor association.
• The lunch might be considered as a thing of value to the realtor. The FAQs address such an event and it appears that by inviting all members of the local realtor association you have minimized the risk of a violation.

6. Participate in a homebuyer education class hosted by a realtor.
• Your participation in the event is not explained. Merely sitting in the class as a student would pose minimal risk. If your institution is sponsoring the class and paying a portion of the expenses related to the class there is increased risk of a violation. The FAQs address education issues.

7. Provide training at the request of a realtor office or local realtor association.
• You have not provided information to determine if there is a value to the realtor. If your presence as a trainer draws attendees there is potential value to the realtor; if the realtor charges a fee for the training then it is likely that your presence increases the value to the realtor. The FAQs address education issues.

8. Serve on a committee at the local realtor association.
• The realtors refer business to your bank. The concern is your bank delivering a fee or a thing of value to the realtor. Donating your time to serve on a board at the realtor associations seems unlikely to result in a violation.

• This reply was modified 2 years, 6 months ago by jholzknecht.

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