The bank is wishing to revive an old realty subsidiary of ours in order to sell some of our OREO properties.

We have Loan Originators (who do not have approval authority) who are also real estate licenced. Are there any prohibitions against allowing these individuals to act as both licenced realtor and also take the application for the property, as long as they do not have underwriting or approval authority?

Prohibitions against benefitting fincially from both?

bump

A subsidiary is not a department of your bank therefore employees working on behalf of the subsidiary can not be paid for referrals by your bank without violating Sec. 8. They would be "brokers" and the broker rules and disclosures would be applicable IMO.

And that would mean what, exactly??

Sorry for the ignorance here, but I am more of a deposit reg guy.

If they are acting on behalf of the subsidiary you (your financial institution) cannot pay them any referral fees. They would have to earn the fee just as any other broker and any "broker fee" paid will be a pre-paid finance charge.

Dan is pointing out that this situation may not directly fall under the exemption for the payment to the bank's own employees found in Regulaton X:

3500.14(g)(1)(vii) An employer's payment to its own employees for any referral activities.

And when you mention referral fee, are we using that in the same tongue as the LO commission?

Basically, what I am trying to confirm or deny, can the LO also work as a compensated Agent for the sub, i.e. as the agent they help write or broker the deal, and if the customer chooses to finance with our bank, can that same Agent then act as the LO for that customer and then be compensated for both services?

It is sounding like no.

And if No is the case, what do you recommend: that we look at compensating for one end or the other and not both, or simply stick to compensating them as LO's and hire agents to work like agents?

I would recommend that you get your attorney involved in this discussion. There are too many variables and most of us are not attorneys. Some of the issue are: when you say sub. - is that a sub of the bank or of a holding company, can you establish a dual employee relationship under these circumstances, does your State law allow a licensed real estate broker involved in the transaction to also act as a LO or mortgage loan broker (illegal in some States), etc.