You talked about referral fees to real estate agents but I am a licensed real estate agent and a licensed loan officer. Why can't I earn money on both?
--Carla from California
Again, I must reiterate that I am not a legal advisor. Plus I can't comment on different state laws. However, I should have clarified. A referral fee is based upon paying for a referral. It is not paying for work accomplished. If you do the work of a loan officer and a real estate agent, and your state allows you to be compensated for both on the same transaction -- that is a different story. What RESPA is trying to prevent is someone getting paid just for a handoff, which means the lender does all the work, yet extra cost is added to the equation.
There were times in the past that lenders paid Realtors for such things as taking a loan application (actual work that saves the company money). Of course, today that is more difficult to claim because people can apply on-line. Plus, this is a state issue. Some states allow people to be both loan officer and real estate agent, but not get paid for both on the same transaction. Again, I can't comment on the laws--just in general as to why pure referral fees are forbidden. But here is a question which arises from your question: if allowed by the state, should you do both? I will delve into that question next week.
Dave Hershman has been the leading author and a top speaker for the industry for decades with six books authored and hundreds of articles published. His website is www.originationpro.com. If you have a reaction to this commentary or another question you would like answered in this column? Email Dave directly at firstname.lastname@example.org.