Our mortgage lenders are wanting to place yard signs advertising themselves and the bank on properties listed for sale or under construction by a builder with permission by the property owner/realtor/builder. I have read conflicting information as I have tried to determine if this is an acceptable marketing strategy or a RESPA violation. The bank would cover the expense of the signs and be responsible for placing them once permission is received. The bank is not asking for a referral or compensating the property owner/realtor/builder in any way. However, I believe it could be construed that the bank is receiving free advertising (a thing of value) for referrals. Based on my research, I have seen opinions stating that placement of a sign with permission is not a RESPA violation if that is the extent of the activity. But, how do we prove that? Would an agreement with the property owner/realtor/builder detailing the arrangement be necessary, including payment for that advertising space?
Section 8 violations occur when a thing of value is given in return for a referral of mortgage business. In the described situation, the bank is arguably receiving a thing of value – the exclusive right to place an advertisement on the property. but there does not appear to be referral back to the builder. If the bank is making concessions on a builder loan and then the builder grants the exclusive right to list the property, then the quid pro quo requirement of Section 8 appears to come in to play.