We have a lender that wants to add a picture and description of a house and the listing agent's info to a flyer promoting the bank. These would be placed in the house for open houses.

We're aware of FAQ 18: 18. Can a mortgage banker and a real estate broker advertise their services together, for example, on the same brochure or newspaper advertisement?
Nothing in RESPA prevents joint advertising. However, if one party is paying less than a pro-rata share for the brochure or advertisement, there could be a RESPA violation.

But, in this case, our cost would be nominal. We do in-house printing at a nickel a copy, and would only print a few for each open house. The Realtor might owe us a $1 for each open house.

So, the cost is nominal, but, in truth, we probably wouldn't get the flyer in the house without it. We are giving something of value for the chance at the referral.

Am I going overboard in telling the lender not to do this?

It's not just related to the cost of the supplies. You are providing advertising space for the Realtor. If the Realtor had to purchase that advertising what would they have to pay in your market for the size and content of the advertisement? And what you say you would charge them is irrelevant.

Dan,
Say the realtor and lender have a joint advertisement (same scenario as above) The realtor pays for the ad and our mortgage lender pays the realtor 33% of the cost because the realtor takes up more space in the ad. Do you think this would fly?

Kara

You must pay your pro-rata share of the advertising cost. If your share is 1/3 then that's what you pay.

thanks

Can it be argued that the open house flyers are of no value to the realtor? If they are only distributed within the house, the buyers are already there (no advertising required). This is really only an advertisement for the lender, although the house and realtor info are put on the flyer for the buyers reference to the loan terms. If the flyers were distributed outside the open house, I would agree that it is an advertisement with value to the realtor. I think I can argue this.

The flyer will leave the open house with the prospective buyers therefore the flyer will be a later reminder of the house's location and description, the Realtor representing the house and a lender that may provide financing. How would you argue this is not an advertisement?

What about the value the realtor is giving the bank by allowing us to put flyers in the house? How do we quanitfy that?

Bump. This has come up again with everyone in the spring home shopping spirit.

I think that Dan gave you a good sound perspective. There aren't any others that would be more correct. It comes down to that you are going to have to make the risk call on this one.

What if the bank provides the same ad to the realtor, but does not include the realtor's information in the ad?

Not sure if this complicates the issue or simplies it - the ad is still being provided to the realtor for distribution at an open house. Still a potential section 8 issue, so we still need to make sure costs are prorated? By not including them, do we still have a "thing of value"?

I don't see how this will work in reality. Why would a realtor pick our flyer without their info over one from another lender that has their info? But this question has been posed to me . . .

In the scenario LJones offers, if the bank pays for the advertising, could this be seen as a referral fee even though it was for the opportunity to advertise our bank and the products we offer?

If the fliers are placed in a open-house without compensation being paid then the Realtor is providing free advertising space which is a thing of value.

Do like we did and get your attorney to draw up a marketing contract.