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Hors d'oeuvres and Drinks

Answered by: 
Kathleen Blanchard

Question: 
Is it a violation of Section 8 of RESPA for a title company to invite lenders and loan support staff to a local restaurant for hors d'oeuvres and drinks? The invitation is only for our bank employees, not those of other banks. This same company also provides lunch to all bank employees at Christmas time. The title company is also a bank customer.
Answer: 

Section 8 of RESPA prohibits anyone from giving or accepting a fee, kickback or any thing of value in exchange for referrals of settlement service business involving a federally related mortgage loan. The problem here is that you are only getting the hors d'ouevres and drinks because you do refer business to the title company, which makes it difficult to show that it was not in exchange for referrals. If it were an open party that any local businesses could attend, it could be viewed differently. In this situation, where it is just your bank, it could easily be construed as an exchange for referrals and should therefore not be accepted by the bank. Additionally, some states have statutes for title companies that explicitly prohibit the giving of any type of gift, entertainment, etc. to lenders.

First published on BankersOnline.com 2/12/07

First published on 02/12/2007

Filed under: 
Compliance
Filed under compliance as: 
IT
RESPA

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