I really think the following situation is a definite RESPA violation, but hopefully you all can point out something that I've missed and will convince me it is NOT a violation. Situation: Our primary Mortgage Loan Officer purchases her primary residence. Our bank makes a short-term loan (6 months). Attorney that does title exam, final and warrany deed provides a $75 Professional Discount to the mortgage loan officer. This attorney does frequent work for the bank. I'm convinced this is a PROBLEM. Please let me know your thoughts.

I agree it is a problem. The thing of value is present and it would appear it is provided as a result of past and/or future referrals.

What reason is provided for the discount, and do you also have a ethics rule which would also prohibit this?

At this point I haven't questioned anyone why the discount was given. I guess I wanted my ducks in a row before I had to talk to anyone about this. I'll check the ethics policy to see if it addresses. Thanks for your comments.

This part of RESPA always seems more confusing to me than it should. Wouldn't the magnitude of the 'problem' be the same if the attorney was used infrequently, perhaps seldom?

Also, once a violation occurs, there seems little that can be done to cure it. But it seems requiring the loan officer to pay $75.00 to the attorney would be appropriate.

I agree that whether the attorney is used frequently or not, the issue remains the same.

Is the loan for six (6) months? If so, it would appear to be temporary financing and RESPA would not apply.

I don't think the concern goes away just because the subject loan is not covered by RESPA. The real question is why the lender received this discount?

Is it a discount that the attorney makes for ALL loan officers in the area? Or is it a "thank you" for refering other (RESPA covered) business?

This situation would be a violation of our(and most others, as well) conflict of interest policy. The basis of the policy is the Bank Bribery Act. There are potential criminal and civil sanctions for both giver and receiver of the discount in such cases.

Ah, Bonnie my friend, OnTheEdge wanted assurance that this situation was not a "RESPA violation". With only the facts presented, it does not appear to be so.

As for the "Bribery" aspect, the facts are insufficient to come to the conclusion pbrinker came to. It assumes the recipient of the discount refers the business and assumes that the "Professional Discount" is not available in a like amount to other customers of the attorney.

Of course we could consult an attorney to verify this...

Bonnie, what are you doing up so late? Have a glass of Merlot and get some sleep.

What makes you think that just because this transaction isn't covered by RESPA that it is not a possible Section 8 violation? If the attorney does fee based real estate settlement work for the bank and then started giving all the loan officers (or just one) a free will and testament, that would be a Section 8 violation just as this example would............ It's a thing of value whether directly tied to a specific RESPA covered transaction or not.

And you know what that means - no more free popcorn from the title companies

Buy a donut - go to jail.