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#314205 - 02/09/05 03:26 PM RESPA Section 8 Issue?
M&M Offline
Platinum Poster
Joined: Nov 2003
Posts: 527
Midwest
We have a builder who wants to team up on advertising with one of our mortgage officers. The builder is a current commercial customer of our bank.

The builder is willing to recommend our mortgage officer on their advertising, most likely as their preferred lender, for a fee of $300 per month. The cost covers inclusion on tv and print ads. To customers, the mortgage officer is offering a $250 gift certificate to a home improvement store, the builder is offering $1,000 free upgrades, and the cable company is offering free installation and 6 months basic cable free. I'm concerned about Section 8...

To complicate matters just a litte bit more, one of the owners of the company is a real estate agent, however he doesn't exclusively market his company's homes. Any thoughts??

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Lending Compliance
#314206 - 02/09/05 05:43 PM Re: RESPA Section 8 Issue?
GreatBlue Offline
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GreatBlue
Joined: Feb 2003
Posts: 2,362
Colorado
I wouldn't be concerned about the give aways to the customers. Those shouldn't be issues under section 8.

While there's always the risk or criticism on the issue, I think you could be ok with the $300 per month as long as you can justify that it is a shared cost of the advertisements. You probably need to determine what the overall cost is to see if your share is reasonable. If the builder is only paying $300, and charging you $300, you have a problem.

This is addressed in HUD's RESPA FAQs. Question 18 states:

18. Can a mortgage banker and a real estate broker advertise their services together, for example, on the same brochure or newspaper advertisement?

A. 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.
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Opinions are mine and not necessarily my employer's.

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#314207 - 02/09/05 07:44 PM Re: RESPA Section 8 Issue?
M&M Offline
Platinum Poster
Joined: Nov 2003
Posts: 527
Midwest
Thank you for the feedback!! Does it make any difference that this is a builder, and not a realtor?

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#314208 - 02/09/05 08:10 PM Re: RESPA Section 8 Issue?
RR Joker Offline
10K Club
RR Joker
Joined: Nov 2002
Posts: 20,644
The Swamp
Nope.
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My opinion only. Not legal advice.

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#314209 - 02/09/05 08:52 PM Re: RESPA Section 8 Issue?
GreatBlue Offline
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GreatBlue
Joined: Feb 2003
Posts: 2,362
Colorado
I agree. The same principle applies.
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Opinions are mine and not necessarily my employer's.

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#314210 - 02/10/05 07:00 PM Re: RESPA Section 8 Issue?
M&M Offline
Platinum Poster
Joined: Nov 2003
Posts: 527
Midwest
I confirmed that the $300/month fee is a small part of the builder's advertising budget. So, I think we're ok on Section 8 concerns. Any other concerns aside from the endorsement of the builder by our bank?

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