Can an MLO refer a loan to another MLO for a fee?

If they can, does the amount of the referral fee go on the GFE / HUD as part of the origination fee?

Can an MLO refer a loan to another MLO for a fee?

Depends on what you mean by referral. You mean act as a broker?? If you mean just a referral, then you would have a Section 8 violation.

Section 8... great.

What if they both work for the same bank, but one has more expertise with a particular loan type?

First, why would a bank condone one employee paying another employee??

Second, Section 8 would apply regardless.

The bank isn't, a green mlo wanted to give a rehab loan to another mlo for a referral fee.

If the bank isn't condoning it, then just tell them no. You don't need a reason.

The MLO in question is saying under RESPA section 19a (???), a bank can pay one of their employees (even if they are an MLO) a referral fee, if they (the MLO) refers the loan to another MLO in the company.

Thoughts?

There is no .19(a) in RESPA.

a bank can pay one of their employees

I thought you said one MLO was going to pay the other MLO a referral fee??????? How is the bank involved???

Both MLO's work for the same bank. MLO 1 meets with customer, does not specialize in loan customer wants. MLO 1 recommends MLO 2 (who works for same bank). Bank pays MLO 1 a referral fee.

Why would the bank pay for a referral they already had in pocket?

If MLO1 didn't want to deal with the loan, then tough nouggies for him/her. They choose to pass on the deal, and now they want something for nothing? They need to spend more time looking for their next deal rather than asking the bank to compensate they for not turning business away.

They choose to pass on the deal, and now they want something for nothing? They need to spend more time looking for their next deal rather than asking the bank to compensate they for not turning business away.

100% agree. We would never consider paying a MLO a referral fee for passing another loan to a more experienced MLO. We would expect the MLO to become competent to handle all residential mortgage requests we receive; or to find another place of employment.

Dan and Jay, I understand and agree with your sentiments, but is it a section 8 violation?

What if the MLO 1 is not licensed in a state that the borrower wants to do business in, but MLO 2 is?

See RESPA 1024.14(g)(vii).

Thanks Dan. Is the dollar amount of the referral required to be included in the origination fee on the GFE or on the HUD at closing?

Employee compensation is not included on the HUD-1. Since when does a bank employee need to be licensed by a specific State??

Non-depository institution, state licensed, as are our MLO's.

You need to be talking to your legal counsel. There very well may be additional State laws that you have to abide by. You are talking to a group of people that are not in a peer position. Our opinions are probably more than worthless to you outside of RESPA considerations.

I work for a large non-depository lender
We do not fund non QM loans
Can I receive a referral fee to refer to non-QM lender I trust
Both Myself and the Lender are NMLS licensed in same state
My contacts reflect my body of work so it's no as if I'm getting paid for nothing. Especially if I set up the file.
Respa...there was work performed

RESPA Section 8 considerations are a very complex issue. No one is going to be able to address this when all we have is six short lines of text. You need to be sitting down with knowledgably legal counsel to analyze the actual situation and to draw up a broker agreement to memorialize your arrangement.