Secondary Market Referral Agreement

Posted By: beegee

Secondary Market Referral Agreement - 04/27/20 05:50 PM

We are looking at a referral agreement where the bank will send customers looking for secondary market products (fixed rate loans, VA, FHA, etc.) to a mortgage broker, and in return, the bank will get a referral fee of 1% of the loan origination amount. The bank collects certain information from the customer up front, but the underwriting and servicing takes place with the mortgage broker.

What compliance issues does the bank need to take into consideration on this type of arrangement?
Posted By: rlcarey

Re: Secondary Market Referral Agreement - 04/27/20 06:01 PM

Might want to read this first: https://archives.hud.gov/news/1999/rspntce.html
Posted By: beegee

Re: Secondary Market Referral Agreement - 04/27/20 06:21 PM

Thanks rlcarey - I should have used the term mortgage lender instead of broker.
Posted By: rlcarey

Re: Secondary Market Referral Agreement - 04/27/20 06:33 PM

Doesn't really matter - that would make you the broker then. All Section 8 rules will apply for the fee you are paid for your services. The use of the term "referral fee" should not really be in your vocabulary when discussing such a relationship.
Posted By: beegee

Re: Secondary Market Referral Agreement - 04/27/20 06:36 PM

ok - thanks!