Is this a Violation of RESPA??

The bank is wanting to compensate employees that refer loan customers to our loan department and if the loan is generated then the employee would receive $100.00? Does this violate RESPA in any way?

g) Fees, salaries, compensation, or other payments. (1) Section 8 of RESPA permits:

(i) A payment to an attorney at law for services actually rendered;

(ii) A payment by a title company to its duly appointed agent for services actually performed in the issuance of a policy of title insurance;

(iii) A payment by a lender to its duly appointed agent or contractor for services actually performed in the origination, processing, or funding of a loan;

(iv) A payment to any person of a bona fide salary or compensation or other payment for goods or facilities actually furnished or for services actually performed;

(v) A payment pursuant to cooperative brokerage and referral arrangements or agreements between real estate agents and real estate brokers. (The statutory exemption restated in this paragraph refers only to fee divisions within real estate brokerage arrangements when all parties are acting in a real estate brokerage capacity, and has no applicability to any fee arrangements between real estate brokers and mortgage brokers or between mortgage brokers.);

(vi) Normal promotional and educational activities that are not conditioned on the referral of business and that do not involve the defraying of expenses that otherwise would be incurred by persons in a position to refer settlement services or business incident thereto; or

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

We are also considering this - looks like we are in the clear if we do.

Thanks, RR Joker.

What about REG Z, Loan Originator Compensation Rules?

You will be fine with a flat fee. You can't tie the fee to a loan term or proxy of a term.

You will need to be cognizant of the new LO rules and make sure any new hires who will be doing the referrals go through backgeround/crredit checks.