I bring a gift to the buyer at settlement. One loan officer told me that I am violating RESPA's rules by doing so. Is this true? —Martha from Georgia
I would like to congratulate you on doing two very good things. First, going to settlement is a very important service and marketing activity for an originator. Woody Allen once said, 90% of life is just showing up. Nothing is more important than showing up at settlement. We will talk about why in a follow-up to this answer. Secondly, you are giving a gift to say thank you. We don't say thank you enough in this industry. Actually, saying thank you is a lost art in business in America.
Now for your legal question. I am not an attorney or a government official, so I can't give you official legal advice in this regard. However, I am pretty certain that what you are doing is fine. The "kickback" rules of RESPA are designed to keep the costs to consumers down by outlawing payments to those who are not adding value to the process. The gift is not increasing the cost to the consumer, as long as it is not that expensive. If you gave the gift to the Realtor, that would be another matter.
Also, if the gift were worth hundreds or thousands of dollars, then this would be a lender contribution which would need to be reflected on the Closing Disclosure. In this case, a small token should not be a worry. On the other hand, just because the gift does not cost much, does not mean it can't have great value to your client. And the process of gift giving can have great value to you as well. More on that topic coming as well. —Dave
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.