Thursday, March 25, 2010

RESPA Referral Fee Matrix

Check this out.  You have to be kidding me.  Is there seriously anyone out there still playing the referral fee game and thinking that regulators will give them a pass?

I found that little jewel in under this blog post:

LO’s are again asking about the RESPA rules — about when you can legally pay an affiliated party a referral fee.  Dr. Gary Lacefield, RESPA Expert, has provided a RESPA REFERRAL FEE MATRIX and you can find it in the Charts & Checklist section of www.MortgageCurrentcy.com



My advice?   Forget it, LO folks.  Make your money the honest wayJust do your job well.  Real competition and effective marketing will create winners and losers.  Consumers do not need to support a referral fee network.   Nobody wants to pay a higher fee for a crappy LO who can't get business any other way.  Don't embarrass yourself by sinking back into corruption.  You are better than that, okay?

3 comments:

James said...

I agree LO's need to stick with the program and produce quality loans, not loans that are pushed through side money.

Connor MacIvor said...

I am laughing at the fact referral fee's are not allowed for Realtors - I a curious if it is because of a lack of required education to obtain a re license. Maybe being viewed as we cannot handle it. Attorneys and Dr's have no issue - but whoa to the Real Estate Brokers' - Shall not - $50.00 is ok, microwaves are ok - but don't go any farther... Am I miss understanding this...

Diane Cipa said...

Morning, Connor:

As I recall, without looking it up, back in the 1970s a congressman found out a relative had been steered into a bad mortgage deal by a real estate agent who had received a kickback. This started the RESPA anti-kickback rules.

While you can argue whether or not kickbacks rules should exist, while they do, it's important that they be enforced to maintain a level playing field.

If you have one lender operating within the law and another slipping gift cards to agents at closing, that's a problem.

Now, let me put on my consumer hat and say that consumers expect the word agent to mean something. by that I mean acting in their interest. Consumers being represented by someone who might steer them into a crappy deal in exchange for $50 aren't being well served.

Even if the deal is okay, I guarantee it is costing the consumer $50 more than it otherwise would. Kickbacks, in any amount, increase the cost of the goods and services being rendered to the consumer in any industry.

So, a consumer bargaining with you for a fair price for services ends up indirectly paying you more than they bargained for and that's not fair dealing. ;)