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#46700 - 12/03/02 09:40 PM RESPA Section 8
Anonymous
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Given the broad definition of a "thing of value", under what circumstances can a bank or mortgage company include a link to a realtor or builder on its website and not be in violation of RESPA's Section 8? Does the use of reciprocal links between a bank and the settlement service provider mitigate or increase risk? For purposes of these questions, assume the links would be to/from individual loan officer or realtor websites.

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#46701 - 12/03/02 09:51 PM Re: RESPA Section 8
Andy_Z Offline
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The answer is, we don't know. The literal answer is, I don't want to be the test case. What risks are you, and your individually listed lenders, willing to take?

There is no official opinion either way, don't get me wrong. At face value it appears minor, but if the results turn out to be major and garner regulatory or competitory attention, watch out.
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#46702 - 12/04/02 01:21 PM Re: RESPA Section 8
Richard Insley Offline
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The $22 Federal Express fee in the "Rodash" case also appeared to be a minor problem--but it almost caused the mortgage industry to collapse!

Section 8 carries a criminal penalty of up to 1 year in prison. Who in your bank wants to take even a tiny risk that you could be the case that becomes HUD's warning shot across the industry's bow?
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#46703 - 12/04/02 02:28 PM Re: RESPA Section 8
Andy_Z Offline
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We often discuss maximum penalties. And while I want neither the maximum nor the minimum imposed upon me or mine, has anyone actually done jail time for RESPA violations? I've often looked up penalties for BSA and flood and used them in training, do we know when RESPA penalties have been imposed?
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AndyZ CRCM
My opinions are not necessarily my employers.
R+R-R=R+R
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell

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#46704 - 12/05/02 01:24 PM Re: RESPA Section 8
Richard Insley Offline
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Richard Insley
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I've never looked into it because I don't like flirting with disaster. My philosophy is "if you can't do the time, don't do the crime." When the consequences of a particular violation are unacceptable, then your risk tolerance should be zero. No one in my bank ever volunteered to go to jail if we guessed wrong.
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...gone fishing.

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#46705 - 12/05/02 10:04 PM Re: RESPA Section 8
Howard Lax Offline
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Howard Lax
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Bloomfield Hills, Michigan
Fees for services are OK, and so are advertisements, provided that a kickback cannot be inferred from the advertising fee. You can advertise on a settlement service provider's web site provided that you pay no more than your pro-rata share of the cost of the web site. This is the same issue as a lender publishing an ad in the realtor's newsletter - if you take 10% of the space of the newsletter, you pay 10% of the cost of producing and distributing the newsletter. There are old unpublished letters from HUD warning of the compensation limits related to realtor newsletters.
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Howard A. Lax Lipson, Neilson, et. al. Bloomfield Hills, MI hlax@lipsonneilson.com

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#46706 - 12/05/02 10:41 PM Re: RESPA Section 8
Andy_Z Offline
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Howard, that formula seems easier to apply to a 6 page newsletter than a Web site. Have you put thought into how you would do that on the Web, a proportional cost of the site (seems excessive), the section or page with the ad (a possibility but how do you decide on the cost of THAT page), or the more common traffic generated by a link, as monitored by a counter somewhere?
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AndyZ CRCM
My opinions are not necessarily my employers.
R+R-R=R+R
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell

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#46707 - 12/06/02 03:16 PM Re: RESPA Section 8
Anonymous
Unregistered

Would the cost be considered offsetting if you put a link on each website (i.e., one on the loan officer's going to the realtor and one on the realtor's going to the loan officer site)?

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#46708 - 12/06/02 03:28 PM Re: RESPA Section 8
Andy_Z Offline
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I asked this question before. If a detailed auditor looked at it, they'd have to ask about hit counts. Similar "referral" counts would, in my mind, be required for reciprocal links to cancel out the value of one another. Otherwise there is no effect if I link to you, and you to me. But your referrals to me are 10K hits a month and mine to you are 10 because my site derives to originating traffic, only hits from your link. I'd be the one getting all the value.
_________________________
AndyZ CRCM
My opinions are not necessarily my employers.
R+R-R=R+R
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell

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#46709 - 12/06/02 04:21 PM Re: RESPA Section 8
Richard Insley Offline
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Toano, VA
I think HUD would laugh at the "offsetting hit count" argument. Section 8 applies to anyone who "...gives or receives a thing of value...", not a "thing of net value." If both are giving or receiving, then both are at risk of sharing a double at Club Fed.
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#46710 - 12/06/02 05:09 PM Re: RESPA Section 8
Andy_Z Offline
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A case may be made that this would fit under a joint advertising exception.
_________________________
AndyZ CRCM
My opinions are not necessarily my employers.
R+R-R=R+R
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell

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#46711 - 12/06/02 06:09 PM Re: RESPA Section 8
Richard Insley Offline
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Richard Insley
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Toano, VA
What's the product/service we are jointly advertising?
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...gone fishing.

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