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Lurking RESPA Violations?

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Our Chairman of the Board owns a real estate company, our bank and the mortgage company. The realtor at the subdivision wants to put out a brochure to customers that provides a discount on construction costs if the customer uses the bank for the construction loan and the mortgage company for the permanent. There will be a stated discount to customers that use other bank/mortgage companies, but the amount will be less. Is there a RESPA violation lurking here somewhere? Also, the realtor (and/or the bank) is going to have to provide the affiliated business arrangement notice when the referral is made, is that correct?

RESPA does not prohibit the borrower from receiving something of value for the referral of settlement business. If the borrower is the one receiving the discount for using the affiliated arrangement that does not violate RESPA. You are correct that the AFBA notice will be required.

First published on 6/04/07

First published on 06/04/2007

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