[ndarby]

I would like to get your opinion on two scenarios as to whether or not these could be RESPA violations:

1. A construction company that is one of our customers would like to place one of our lenders name and contact information on the “preferred lender” page of their website at no charge to the Bank. This list would be used by the construction company’s customers to choose a lender (the customer would not be required to choose one of the lenders from the list).

2. In addition to scenario number 1, if a customer chose to do business with one of the lenders on the “preferred list”, the customer would receive a rate and/or fee discount from the lender.

Thank you!

[kowsley]

This issue relates to Section 8 violations as detailed in RESPA, section 1024.14. The requirements prohibit any person from accepting a kickback, fee, or other thing of value involving a settlement service of a federally related mortgage loan.

Given your details above, it sounds as if the construction company’s placement of a lender’s name on their website would not be a violation as the bank/lender is not receiving a kickback, fee, etc. and the customer gets to select any lender of their choosing.

The second scenario doesn’t appear to be an issue either as the customer is the one benefiting from choosing the lender by receiving a lower rate or fee.

Careful consideration needs to be given regarding the relationship between the construction company and the lender. Is there any type of agreement between them that results in the lender or the construction co. receiving anything of value? The lender is providing a service that is considered a settlement service and shouldn’t be receiving any kickback, fee, etc.

[ndarby]

I have one follow-up question. Do you think having our lender’s name and contact information on the website would be considered advertising? And if so, and we are not paying for the advertising, could this be considered a “thing of value” that we are getting from our customer?

Thank you!

[Author]

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