If a bank establishes a wholly-owned subsidiary mortgage company with its own employees, can the mortgage company pay incentive payments to its own employees, from its own funds for referring say HE loans to the bank?

What type of incentive or employee compensation plans could the mortgage company establish without violating RESPA? For example, mortgage processors are paid an incentive ($25.00 per loan) for every loan they book at or above a certain threshold.

Thank you

Look here for your answer.

3500.14(g)(vii)An employer's payment to its own employees for any referral activities.

Thanks

That is what I thought! I just wanted to make sure that an examiner wouldn't get hung-up on the fact that these mortgage company employees were performing settlement services or somehow the fee albeit from the sub, couldn't be viewed as unearned or as some kind of split fee arrangement. I also wasn't sure if the incentive program had to be limited to the same kind of methodology as the management compensation program identified in the regulation (i.e., based on a capture rate, etc.) Is this your thoughts too?

Thank you so much!

I am new to the site, can you tell me where 24CFR 3500.14 is located?

It is in the Code of Federal Regulations.

24 CFR 3500

Is the answer the same if the BANK pays the referral fee to the employee of its wholly owned subsidiary?

You can pay your own employees, not someone else's employees, for a referral.