We received a mortgage application from a broker who is charging a 1% fee for referring the applicant to us. My memory is telling me this is a violation of some sort. Is it??

http://www.hud.gov/offices/hsg/sfh/res/resp0222.cfm

Go to section II. RESPA Policy Statement 1999-1. They have to perform a certain number of tasks in order to earn the fee.

If it is a commercial transaction, the broker can charge the 1% fee and we would just have make sure it's reflected on the HUD and we've reviewed the disclosure/fee agreement between the borrower and the broker.....right??

Commercial/business transactions are not subject to RESPA so it would be based on the agreement and/or state law if applicable.