Lending referrals
by Lucy Griffin, BOL Guru
Guru Bios
Question: I know that our affiliated mortgage company cannot pay bank employees a referral fee for sending mortgage applications to the mortgage company. But can the mortgage company compensate bank employees for preparing applications and doing five of the recommended settlement service steps such as obtaining verifications?
Answer: This type of compensation should be permissible as long as you maintain careful records of the work performed. Essentially, the bank employees are acting in the same way as credit counselors or mortgage brokers who expect compensation for their work. If you decide to implement such a compensation plan, make sure that the compensation is earned and that the compensation paid is consistent with the value of the work performed.
Copyright © 2004 Compliance Action. Originally appeared in Compliance Action, Vol. 9, No. 5, 3/04
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