Mortgage fees, attorney's fees, and kickbacks

Question: Is it a violation of RESPA to recommend mortgage applicants only those service providers who have deposit relationships with us?

Answer: If the borrower has free choice, then passing on the name would not be a violation unless there was an affiliated business arrangement with the service provider - such as the president of the title company is a director of your institution. If there is such a relationship, you would have to give the affiliated business arrangement notice before making the referral. In making the referral, you would have to disclose the relationship. In this case, the relationship is the deposit account along with any other existing relationship.

Copyright © 2004 Compliance Action. Originally appeared in Compliance Action, Vol. 8, No. 14, 1/04