We have a real estate developer customer that wants to pay closing costs to be able to reduce the fixed rate on lot loans to try to move some of his inventory. Can we allow the seller/developer to pay points/fees to buy down the rate for the borrower? He will pay the closing costs which will include a large origination fee or points so the bank will reduce the fixed rate on the loan. Could this be viewed as a RESPA violation in any way?

The benefit is going to the borrower. Plus, if these are bare lots, RESPA does not apply.