RESPA Section 8 Issue Again

I'm confused on the prohibitions of RESPA Section 8. A few weeks ago, I posted a question regarding joint marketing between a realtor and a bank. The response I received was that if the bank was paying a reasonable monthly fee for inclusion in the builder's ads, there wasn't a Section 8 issue. However I've been reading old posts, and I seem to be reading the opposite- referrals are not allowed if no service is performed, and anything that is a thing of value is prohibited in exchange for or in anticipation of a referral. I have a piece to review that is a realtor promoting the use of one of our mortgage loan officers, and I don't think this is allowed. HELP!!!

Question 18 in HUD's Industry FAQs about RESPA clarifies that a mortgage banker and a real estate broker may advertise their services together. HUD noted that nothing in RESPA prevents joint advertising. It cautioned that if one party is paying less than a pro-rata share for the brochure or advertisement, there could be a RESPA violation.

You need to look at what you are getting from the builder and compare it to what you are paying. If you are getting advertisement space, and you are paying a reasonable price for it, then you don't have a section 8 violation. This scenario is specifically addressed in HUD's FAQs for industry.

"18.Can a mortgage banker and a real estate broker advertise their services together, for example, on the same brochure or newspaper advertisement?

"Nothing in RESPA prevents joint advertising. However, if one party is paying less than a pro-rata share for the brochure or advertisement, there could be a RESPA violation."

If you are getting advertising and not paying for it, or paying more than your share, then you have the presumption that the compensation is for referrals.

GreatBlue- thanks. In the other piece I mentioned, the commercial (completely unrelated to the prior example), the realtor is offering inclusion to the mortgage officer for no fee. One could almost assume the realtor is expecting something in return, i.e. a referral. Agree?!

Yes. That is definitely the assumption I would make. It's likely the assumption your regulator will make as well.

I'd like to tack on to this thread. We have a joint marketing agreement with an insurance agency. Would you consider it a Section 8 violation to put a link on our website to theirs? I feel that they are a settlement provider in that they provide homeowners and flood insurance and essentially why would we put the link on the site if we weren't meaning to refer business their way? Or am I stretching it? Any input would be appreciated. Thanks!

Or how about business cards placed in the branch lobby?

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I'd like to tack on to this thread. We have a joint marketing agreement with an insurance agency. Would you consider it a Section 8 violation to put a link on our website to theirs? I feel that they are a settlement provider in that they provide homeowners and flood insurance and essentially why would we put the link on the site if we weren't meaning to refer business their way? Or am I stretching it? Any input would be appreciated. Thanks!

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Bump! Anyone have any ideas? I have to report back this afternoon. Thanks.