RESPA & Bonuses For Credit Life Sales

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Question:

Our credit life provider is offering bonuses during a special promotional period to our lenders for selling credit life based on the volume of premiums. Some of these policies are for mortgages (RESPA). Is this a violation of Section 8 of RESPA? If so, would it make a difference if they excluded the amount of the premiums from the real estate loans to calculate the bonus?

Answer:

I think that there is some question as to whether voluntary credit life insurance is a settlement service within the meaning of RESPA. However, I would recommend taking the high road and eliminating any bonuses for mortgagerelated sales. It is definitely the safest way to proceed.

First published on BankersOnline.com 05/19/03