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#2270872 - 05/25/22 03:50 PM De Minimis for "Thing of Value"
TMatt87 Online
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TMatt87
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Idaho
We recently had a request from a lender to give a "cookie mix in a jar" as a thank you to the realtor who sent the deal our way. Total cost is less than $2. I said no, because it is a thing of value, however minimal. Am I being a hard @ss or do you think this would be alright?
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RESPA
#2270874 - 05/25/22 04:01 PM Re: De Minimis for "Thing of Value" TMatt87
rlcarey Online
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rlcarey
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Galveston, TX
Well, there was an old saying "Buy a cookie/donut and go to jail" when it came to Section 8. ,
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#2270878 - 05/25/22 04:38 PM Re: De Minimis for "Thing of Value" TMatt87
CSB98 Offline
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Wisconsin
I am fighting this all the time in our bank. Most lenders we have hired recently come from the broker world where they could do things like this 24/7. We are a smaller community bank regulated by the FDIC. It's been a challenge to get them to understand that what they could do in their previous life will no longer fly in this one.

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#2270879 - 05/25/22 04:54 PM Re: De Minimis for "Thing of Value" TMatt87
Dan Persfull Offline
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Bloomington, IN
Show those "former" broker this:

RESPA’S CONSUMER PROTECTIONS AND PROHIBITED PRACTICES
Section 8: Kickbacks, Fee-Splitting, Unearned Fees
Section 8 of RESPA prohibits anyone from giving or accepting a fee, kickback or anything of value in exchange for referrals of settlement service business involving a federally related mortgage loan. In addition, RESPA prohibits fee splitting and receiving unearned fees for services not actually performed.

Violations of Section 8’s anti-kickback, referral fees and unearned fees provisions of RESPA are subject to criminal and civil penalties. In a criminal case, a person who violates Section 8 may be fined up to $10,000 and imprisoned up to one year. In a private lawsuit, a person who violates Section 8 may be liable to the person charged for the settlement service an amount equal to three times the amount of the charge paid for the service.
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#2270915 - 05/26/22 01:59 PM Re: De Minimis for "Thing of Value" TMatt87
Inspector Offline
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You are making the right call to prohibit it. As everyone says, there is no de minimis so you would be on your own outside of the regulation trying to establish one. Just stick with a heartfelt note.
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#2270958 - 05/26/22 08:33 PM Re: De Minimis for "Thing of Value" TMatt87
TMatt87 Online
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TMatt87
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Idaho
Thanks for the confirmation everyone.
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#2273119 - 07/20/22 04:41 PM Re: De Minimis for "Thing of Value" TMatt87
Mel in WA Offline
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Another situation about defining a "thing of value". A developer in our area is asking us to be the primary lender for a condo project. He has created a website about the project and will be adding a direct link to our website/digital application. The cost to add this link is zero. Could this be considered a thing of value (advertising)? We are struggling to attach a dollar amount to this link.

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#2273123 - 07/20/22 05:14 PM Re: De Minimis for "Thing of Value" TMatt87
rlcarey Online
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rlcarey
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Galveston, TX
Why is he doing this? Use of the bank's name without permission should be referred to your legal counsel.
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#2273151 - 07/20/22 07:37 PM Re: De Minimis for "Thing of Value" TMatt87
Mel in WA Offline
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We have given permission, in the hope of generating applications. Would this collaboration fall under Section 8, since we are "linked" (pun intended) to a third party/developer?

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#2273197 - 07/21/22 02:24 PM Re: De Minimis for "Thing of Value" TMatt87
Dan Persfull Offline
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Bloomington, IN
We have given permission, in the hope of generating applications.Would this collaboration fall under Section 8,

This is my opinion - You are accepting a thing a value (free advertising) in hopes of it generating referrals. This thing of value benefits the bank and the developer, not the borrower.
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#2273202 - 07/21/22 02:57 PM Re: De Minimis for "Thing of Value" TMatt87
Inspector Offline
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Caveats here that I am not suggesting this as a great practice or that it won't result in additional scrutiny of the relationship but I don't think you have a violation of RESPA given the facts you laid out.

For a violation to be present you need a thing of value in exchange for the referral, so the thing of value goes one direction and the referral comes back. As I read the facts you presented, it looks like the "free advertising" (thing of value) is going to the bank and the referrals are also going to the bank. I would actually probably argue that the link in this case is part of the referral.

If there is an additional thing of value going back to the builder in any form then you would have a problem.
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#2273209 - 07/21/22 03:54 PM Re: De Minimis for "Thing of Value" TMatt87
rlcarey Online
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rlcarey
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Galveston, TX
Inspector, I do not disagree. But it goes back to my first question: Why is he doing this? I can only assume that the developer has a loan or some other relationship with the bank. If he is doing this in anticipation of some sort of special treatment or some sort of break or even just better access to the bank for doing this "favor", that constitute a Section 8 issue.
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#2273210 - 07/21/22 03:56 PM Re: De Minimis for "Thing of Value" TMatt87
Dan Persfull Offline
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Bloomington, IN
(b) No referral fees. No person shall give and no person shall accept any fee, kickback or other thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or part of a settlement service involving a federally related mortgage loan shall be referred to any person. Any referral of a settlement service is not a compensable service, except as set forth in §1024.14(g)(1). A company may not pay any other company or the employees of any other company for the referral of settlement service business.

Not quite sure how you can argue the bank is not accepting something of value from the developer in anticipation of receiving referrals from the developer's link advertising the bank as the preferred lender for the project. They both need to share in the advertising expense.
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#2273236 - 07/21/22 08:36 PM Re: De Minimis for "Thing of Value" TMatt87
Inspector Offline
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I would caution against paying for the link here. It is probably worth very little at all and dependent upon what is said on the page with the link it could be part of the referral. For example, if it says "click here to visit our preferred lender" that would likely be a referral. If you are paying for this you are putting a bow on a nicely packaged RESPA violation.
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#2273238 - 07/21/22 08:49 PM Re: De Minimis for "Thing of Value" TMatt87
Dan Persfull Offline
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Bloomington, IN
If you are paying for this you are putting a bow on a nicely packaged RESPA violation.

How would paying for advertising space on a Web page violate Sec. 8?
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#2273244 - 07/22/22 02:08 AM Re: De Minimis for "Thing of Value" TMatt87
Inspector Offline
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Hi Dan - I was not trying to imply that paying for marketing in itself would be a problem. It would depend on the content of the advertising. The example I gave was the developer making the referral on the website by describing the lender as the preferred lender or favorite lender or any other type of language that would represent affirmative influence. If a lender pays for content that is affirmative influence then it could be a violation of RESPA.

I think we have a different interpretation of RESPA Section 8. The issue is the swap, thing of value for referral. Its a kickback, bribery if you want to be harsh about it. If the thing of value and the referral are going the same direction how can it be a kickback? I think there has to be an exchange and I haven't seen anything in the case law that indicated otherwise. (although I am not pretending to be a complete library on the topic)

My view is that there is more risk in this situation to open the checkbook and start paying for something when you know you are going to be getting referrals from the developer. The link isn't provided in exchange and probably has little value anyways outside of the referrals. Questions will be raised as to why the developer is providing the advertising whether you pay for it or not. You can certainly figure out the market value for the link (assuming there isn't affirmative influence), pay that amount, and monitor it from there I just don't see it as necessary.
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#2273307 - 07/22/22 09:09 PM Re: De Minimis for "Thing of Value" TMatt87
Dan Persfull Offline
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Inspector, I can respect that point of view.

(e) states the agreement only has to be implied by the course of business and (f) states a referral can be verbal or in writing that affirmatively influences the selection of the provider. If the bank accepts free advertising from the developer then it would be hard pressed in my opinion to argue the developer is not anticipating referrals from the bank in exchange for that free advertising. In situations like this I believe the marketing for the service should be equally shared or the agreement should not be entered into.

When it comes to Sec. 8 I pretty much side on the very very very & very conservative side of the interpretation.
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#2275158 - 09/05/22 12:39 PM Re: De Minimis for "Thing of Value" TMatt87
Rocky P Online
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Florida
This is from a 2014 TriComply Newsletter.

So, when you jointly advertise your RESPA covered lending with
the local realtor, builder, title company, etc., you must equitably
share in the cost of that advertisement. When you are offered to
advertise for free, for example, on websites, you must still pay as
there are costs involved.

In creating a joint advertisement, there are several costs that we
take for granted. For instance, the person who designs the ad,
even if a full-time employee, is expending time (and thus money)
to create and develop the ad. Then, you send it to the business,
the third party and compliance for review, again, more
time, more money. Next, there are the printing, ink, or electricity
fees that it takes. Then, distribution comes into play. Will it
be distributed via the web or in paper form? Will you send a
master copy via fax or email to the realtor or builder who then
incurs fees for printing? Remember, we are talking about joint
advertisement, not your rate sheet that just promotes your latest
loan products.

When you start doing the math, the reality of “it only takes 5
minutes to whip up an ad” starts to come to light. It is more
than 5 minutes to develop, create, proof, print, re-print, verify,
re-check and all that goes along with each of these activities.
So, you take the monies it costs for all that whipping up for each
entity to be promoted and divide it up proportionally, and each
pays its pro rata share.

RESPA Section 8 should be at the top of your check list in advertising
if you are promoting a federally related mortgage covered
by RESPA. The criminal penalties can include imprisonment
up to one year. Now, we have not heard of anyone going
to jail for RESPA Section 8 advertising violations, but there are
enough financial penalties issued for it to make you want to remember.
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#2275470 - 09/13/22 02:52 PM Re: De Minimis for "Thing of Value" TMatt87
TINKerBell Offline
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I would like clarification please. If a mortgage lender pays a monthly fee to a real estate broker for purchasing data (prospective home buyers and sellers, including their name, email address and phone numbers), this would be considered a kickback, correct?
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#2275480 - 09/13/22 03:50 PM Re: De Minimis for "Thing of Value" TMatt87
Dan Persfull Offline
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Bloomington, IN
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#2275481 - 09/13/22 04:32 PM Re: De Minimis for "Thing of Value" TMatt87
TINKerBell Offline
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Tiger's Den!
Thanks Dan!
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#2275513 - 09/13/22 07:22 PM Re: De Minimis for "Thing of Value" TMatt87
Inspector Offline
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Paying for "data" or leads from a real estate broker isn't necessarily always going to be an issue but it is a risky proposition. If the real estate broker does anything to affirmatively influence the consumers whose data is being purchased the arrangement is going to be looked at as payment for referrals.

You would also want to make sure you had a robust do-not-call scrubbing process and CANSPAM opt outs in the emails in place as well.

A RESPA Section 8 violation with a TCPA lawsuit on the side is going to cut into the return on investment from buying the data.
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