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#2128199 - 04/27/17 02:02 PM Lender/Realtor Combo =Charitable Donation
RolTyde Offline
Member
Joined: Nov 2008
Posts: 78
Anywhere but here
First off, thanks to all of you! I'm at mortgage loan officer that frequents BOL on a daily basis. It has been a huge help to me making sure we are staying compliant.

I have a concern involving another local mortgage lender and a local real estate office. The local newspaper ran a photo and a short blurb about a charitable donation made by the mortgage lender. The blurb explained that the donation ($500) was made to a local charity in honor of a local hero due to them having just purchased a home using the lender for their mortgage and the local real estate office as their realtor. They stated that this is an ongoing project. If a local hero (veteran, active military, fire fighter, police officer, etc), uses this particular local real estate office as their realtor and this mortgage lender for the mortgage, the lender will make a donation to a local charity of $500.

I see red flags all about this and would like to report it but I'm not certain if I'm correct to think this violates RESPA. Any thoughts on this are appreciated!

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#2128337 - 04/28/17 05:50 AM Re: Lender/Realtor Combo =Charitable Donation RolTyde
Inspector Offline
Gold Star
Joined: Apr 2016
Posts: 269
This sounds like a specific program that is available in a number of states and is on the radar of multiple regulators for RESPA concerns.

More specific to what you described, it would be highly dependent upon how the payments were made or conditioned on. Does the lender provide the charitable donation even if a different realtor is involved? What you described says no but they might do it anyways. Maybe the realtor also donates? Also who claims the donation? Is there a tax benefit?

Ultimately, it sounds like a cozy relationship but more information would need to be developed to determine if an issue exists.
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Opinions expressed are my own and do not reflect legal advice or the opinions of my employer.

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#2128356 - 04/28/17 01:11 PM Re: Lender/Realtor Combo =Charitable Donation RolTyde
RolTyde Offline
Member
Joined: Nov 2008
Posts: 78
Anywhere but here
Thanks for your input. I will check into it more. I'm glad to see charities benefiting from this but hate the possibility of unfair practices.

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#2128384 - 04/28/17 03:23 PM Re: Lender/Realtor Combo =Charitable Donation RolTyde
Richard Insley Offline
10K Club
Richard Insley
Joined: Oct 2000
Posts: 10,061
Toano, VA
Section 8 rests squarely on the TINSTAAFL principle. When someone receives something "free", someone else paid for it; and when business organizations are involved, the ultimate payers are rarely the owners of the business. Most often the "free" money will somehow come from the buyer's pocket. Regardless of how confusing the shell game becomes, Section 8 exists to shield buyers from the costs of inducements that circulate among others who stand to benefit from referrals and similar actions that add no value for the buyer. Look carefully and behind every real estate free lunch you will find some type of value transfer that won't pass a Section 8 smell test.
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