Is it a RESPA Section 8 violation for a lender to pay a builder for the following:

(1) periodic access to the builder's manager and sales meetings and open houses for the purpose of the lender to promote its product line to the builder’s employees, representatives and customers?

(2) monthly evaluation reports provided by the builder on the lender's representative performance? The rep offices in the builder's place of business (assume fair market value rent is paid).

If the amount paid is reasonably related to the service provided you are probably OK. If it is not and there are referrals betwen the two entities you probably have a Section 8 violation. Key will be documenting how you determined fair value is given.

Susan,
Steve's assessment appears technically correct to me based on the regulatory considerations. However, I would like to add that since a Section 8 violation could mean time in the slammer, I personally wouldn't greenlight the arrangments you mentioned. HUD's viewpoints over the years have not been a model of consistency.

Pat

Patrick T. Hubbs, CRCM, CBCO

Incidentally, has anyone ever heard of anyone doing jail time (or being criminally proscecuted period) for a RESPA violation? I have not. Not that I'm planning to test the possibility, but I am curious, since I have often over the years stressed in training that "this is a crime".

I love to include in my compliance training the penalties, both civil and criminal, for noncompliance. However, when I see the criminal penalties for violations, it always raises a chuckle when I mention the possibility of doing serious time for Reg Z violations. I can hear the jailhouse conversation now...."what are in for, robbery, murder?" "No, failing to provide accurate truth in lending disclosures."

RESPA Section 8 = "Buy a donut, go to jail."