Would this scenerio be a Respa violation:

We (BANK) accept FHA mortgage loan clients that are referred to us by a brokerage firm. We charge the customer a brokerage fee, disclose it on the settlement statement and forward the fee to the brokerage firm. We prepare all loan documents, underwrite and close the loan in the Bank's name.

Thanks for your input

What did they do to earn the fee? It sounds like nothing but referring the customer to you. That would be a violation.

Al

I agree. They must earn the fee. Review the section II. RESPA Policy Statement 1999-1 in the following document.

http://www.hud.gov/offices/hsg/sfh/res/resp0222.cfm

Does the broker provide any services that you are not aware of such as counseling services, etc? Are they taking an application? On a side note, are you paying the broker a flat fee or a % of the loan income?

We are paying a flat fee - but is a portion of the origination fee.

I agree with both Don and Al. There is a list of items that the broker had to to do earn a fee included in the document that Don provided the link for.

Also it doesn't matter whether they were FHA or not. This rule applies to any type of mortgage loan.

this Q&A may be helpful to you...particularly the SOP's.


Q. A first mortgage loan was referred to the bank by a mortgage broker. As part of this transaction, the bank agreed to pay the mortgage broker an origination fee equal to $1,500 for this loan, once the loan was closed and funded. The application was taken by the mortgage company and forwarded to the bank. Does this create an anti-kickback issue under RESPA?
It is a Section 8 RESPA problem if the mortgage broker didn't do any work on the loan application other make the referral. Just taking an application has no value in HUD's “RESPA world.” The mortgage broker needs to do more — generally five things out of a laundry list. HUD has published 2 SOPs (Statements of Policy) on the issue: SOP 1999-1 and SOP 2000-1). You can find them at: http://www.hud.gov/offices/hsg/sfh/res/respapol.cfm
It doesn't matter who pays or receives the fee, or how it's structured. Section 8 requires that you can only compensate someone for the work done in connection with the loan application. In order to receive any substantial compensation, they need to do what's required under HUD's SOPs ($1,500 is substantial). It's a tough issue because there are a number of lenders who don't follow the rules, but that's what the rule is.