Pay Bank Employees for Mortgage Loan Referrals

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Question:

Is it permissible to pay bank employees for mortgage loan referrals to a mortgage affiliate of the bank? The referral would be paid by the bank to bank employees for generating the businesses. We would like to establish an incentive program based on the loan amount for closed mortgage business only. The payment would be calculated based on the loan amount and would consist of two tiers. Is this in compliance with RESPA? Would we need to complete an Affiliated Business Arrangement Disclosure Statement?

Answer:

You can do this and stay in compliance with RESPA. However, the bank has to pay the incentive to only their own employees and the mortgage affiliate cannot reimburse the bank in any way for the referral fees. See 3500.14(g)(vii) and 3500.15(b)(3). You will need to complete an Affiliated Business Arrangement Disclosure Statement.

First published on BankersOnline.com 3/16/09