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#470268 - 12/14/05 06:42 PM RESPA
JW Gold Star Joined: Nov 2005 Posts: 269 Indiana	We are 1 bank in a 2 bank holding company. Our sister bank has a mortgage center, where we send 100% Mortgage applicants since we do not have such a product in our bank. The other bank gives us a flat fee per loan deal that we send through them. If we give an Affiliated Business Arrangement Disclosure are we in compliance w/Section 8 of RESPA?
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Lending Compliance

#470269 - 12/14/05 06:54 PM Re: RESPA
Cryin&Complyin 100 Club Joined: Jun 2004 Posts: 106 The Deep South	Quote: We are 1 bank in a 2 bank holding company. Our sister bank has a mortgage center, where we send 100% Mortgage applicants since we do not have such a product in our bank. The other bank gives us a flat fee per loan deal that we send through them. If we give an Affiliated Business Arrangement Disclosure are we in compliance w/Section 8 of RESPA? Hmmm, I came from a bank that had a similar setup and they were paying referrals fees across company lines. Even the Trust Department was receiving referral fees from the banks when they referred HELOCs (which, even though they don't require RESPA disclosures, ARE STILL RESPA covered loans and subject to the Section 8 prohibitions). We had to back out ALL of the referrals fees paid across company lines in order to correct the problem. The individual banks and affiliates ate the fees since they couldn't really ask the employees to give back the money. A lesson well learned. I believe that you can refer loans to your "sister bank" as long as you give the AfBA. HOWEVER, the "sister bank", IMO, can NOT pay you a fee for doing so. Good luck! _________________________ *[color:"teal"]My opinion is my own, often to the dismay of my employer![/color]*
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#470270 - 12/14/05 06:55 PM Re: RESPA
JW Gold Star Joined: Nov 2005 Posts: 269 Indiana	The fee actually goes to the bank's income, not to the individual employee. Does that make any difference?
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#470271 - 12/14/05 07:02 PM Re: RESPA
Cryin&Complyin 100 Club Joined: Jun 2004 Posts: 106 The Deep South	Quote: The fee actually goes to the bank's income, not to the individual employee. Does that make any difference? Nope, it doesn't matter if the fees crosses company lines. See excerpt from RESPA below: *§ 3500.14 Prohibition against kickbacks and unearned fees.* (b) No referral fees. No person shall give and no person shall accept any fee, kickback or other thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or part of a settlement service involving a federally related mortgage loan shall be referred to any person. Any referral of a settlement service is not a compensable service, except as set forth in § 3500.14(g)(1). A business entity (whether or not in an affiliate relationship) may not pay any other business entity or the employees of any other business entity for the referral of settlement service business. Hope this helps! _________________________ *[color:"teal"]My opinion is my own, often to the dismay of my employer![/color]*
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#470272 - 12/14/05 07:04 PM Re: RESPA
Dan Persfull 10K Club Joined: Aug 2002 Posts: 47,875 Bloomington, IN	Quote: HOWEVER, the "sister bank", IMO, can NOT pay you a fee for doing so. I agree. You are not employees of the affiliate/sister bank. You are acting as a broker. You may want to review this document . Quote: If we give an Affiliated Business Arrangement Disclosure There's no if to it. You are required to provide the AfBA disclosure. And no, it does not make a difference. The affiliate/sister bank cannot pay your bank for referrals of loans subject to RESPA. _________________________ The opinions expressed are mine and they are not to be taken as legal advice.
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#470273 - 12/14/05 07:25 PM Re: RESPA
David Dickinson 10K Club Joined: Nov 2000 Posts: 18,765 Central City, NE	Credit Compliance: You need to review the HUD document that Dan linked you to. It is possible to receive a fee IF you are providing services in addition to the referral. Scroll down to section II. C. and read this first.
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#470274 - 12/14/05 07:51 PM Re: RESPA
JW Gold Star Joined: Nov 2005 Posts: 269 Indiana	Thanks David. Our lenders are taking the application and discussing general programs w/the borrower. So we just need to worry about the reasonableness of the amount we're collecting w/regard to the work we're performing.
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#470275 - 12/14/05 08:08 PM Re: RESPA
Dan Persfull 10K Club Joined: Aug 2002 Posts: 47,875 Bloomington, IN	Quote: Our lenders are taking the application and discussing general programs w/the borrower. What else are they doing? From Section II C: HUD articulated that it generally would be satisfied that sufficient origination work was performed to justify compensation if it found that: The lender's agent or contractor took the application information (under item (a)); and The lender's agent or contractor performed at least five additional items on the list above. _________________________ The opinions expressed are mine and they are not to be taken as legal advice.
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