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Sharing Employee w/Real Estate Agency: Reg Z/RESPA

Question: 
An employee of the loan department received her real estate license without consultation or approval from Management. The licensing status is currently active. We understand there are implications regarding conflicts of interest, HR policy issues, and independence issues related to any duties associated with real estate lending. However, there are two questions related RESPA and Reg Z. Question 1.- Does sharing an employee with a real estate agency now constitute an affiliated business relationship requiring the Affiliated Business Disclosure? Question 2. How does this impact calculations of points and fees for HOEPA loans? Do we include commissions into the point and fee calculations based on them being paid to a third party?
Answer: 

Andy Zavoina

An affiliated business is based on some form of ownership and that isn't mentioned in the question. I also don't believe the points and fees should be an issue because as you do mention "conflicts of interest" this employee should never be on both sides of this loan as a Realtor and as a lender. To do otherwise does promote an unacceptable conflict of interest in my opinion.

Answer: 

Kathleen Blanchard

This employee cannot be both a realtor and banker on the same deal. That would be self serving and a conflict of interest. If not against your ethics policy, the policy should be updated.

First published on 12/15/2014

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