Skip to content

Lurking RESPA Violations?

Answered by: 

Question: 
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?
Answer: 

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 BankersOnline.com 6/04/07

First published on 06/04/2007

Filed under: 

Banker Store View All

From training, policies, forms, and publications, to office products and occasional gifts, it’s available here:

Banker Store

hot right now

image description

Looking for effective, convenient training on a particular subject?

BOL Learning Connect offers more than 200 courses ON-DEMAND or on CD ROM from AML to Reg Z and every topic in between.

Search Topics