11 Frequently Asked Questions (and Answers) about Kickbacks!

Written By: Karen Deis (Having been a NAR member for 10 years, and past member of NAMB for almost 20 years - serving on the local board of directors - I am amazed that the associations are not bringing this serious issue to the top of their agendas.)

With almost 100 RESPA violation investigations being conducted as you read this - and millions of dollars in fines paid to HUD for RESPA violations - (specifically Section 8), the big, looming quesitons is where have the mortgage bankers' and mortgage brokers' associations been in educating and advising their members on the do's and don'ts involved with this most complex law?

The National Association of Realtors® has addressed the issue head-on by issuing White Papers and giving guidance to the NAR membership.

However, visit the National Association of Mortgage Brokers website at (www.NAMB.org [or for that matter, www.MBAA.org (Mortgage Bankers Assocation)] and neither of their websites offer training, advice or help in answering questions that could (and has) cost their members millions of dollars in fines as well.

Now to be fair, HUD held a meeting in Washington, D.C. on March 21 and a representative of the MBA (Brian Chapelle) was involved in the discussions. Yet, no mention was made of any major representation from NAMB!

To make matters worse, the NAMB convention being held in Minneapolis this year does not have even ONE breakout session (other than how to become a RESPA compliant title company) for their broker membership addressing this all-important issue.

Frequently Asked RESPA Questions & Answers (for subscribers) Provided by NAR's Legal Counsel:

1. RESPA prohibits service providers from giving anything of value in exchange for referrals of business. Does that prohibition apply only to certain types of service providers (i.e. lenders, title companies) from providing food at open houses or does it apply to all service providers (i.e. home inspectors, pest control companies, advertising companies and others)?



2. Is a home warranty company a settlement service provider?



3. If a title/mortgage company sponsors a "get-away" at a resort property for brokers and agents, and offers education, is it a violation of RESPA?



4. When a title company hosts an agent luncheon at an open house, they are providing food in hopes of meeting agents - just as Realtors® hold open houses. Doesn't this need to be looked at in a much more practical way and allowed under RESPA?



5. Is it legal for a Realtor® Association to solicit sponsorships from affiliate members who provide settlement services for Assocation funcstions that are not education-related such as awards and recognition ceremonies and association fundraisers?



6. Does RESPA bar local boards or associations of Realtors<®> or NAR affiliates of their local chapters from accepting from settlement service providers donations or sponsorships of meetings, awards and fundraisers?



7. Is it legal for Affiliate Members who are settlement service providers to sponsor continuing education or new-member orientation classes?



8. Is it legal for Affiliate Members to put on education courses about the services the affiliate member provides for Realtors®?



9. Can an Affiliate Member donate items to the Association's Political Action Committee auctions?



10. May a mortgage company cater the food to be offered at a broker's open house tour?



11. Can brokers and agents accept from lenders and distribute to prospective buyers, flyers containing financing information? For instance, at an open house, may a lender provide flyers that offer closing cost calculations for various down payment scenarios, to be distributed by brokers and agents?

Subscribers, continue this article for answers from the NAR Legal Counsel!

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