Mortgage Broker Kickback

[jschping]

What is the name of your state? NY

Hi,

I just became a mortgage broker and wanted to offer a deal where if anyone refers me a client, I will give them a $250 referral fee. I also wanted to pay real estate agents the same type of deal.

A friend told me this is illegal. Is it? Why is it? Is it illegal even for a guy off the street who refers his friend?

What if I pay "rent" to the real estate agency to get a desk in their offices and become their "official" mortgage broker for clients? And would it have to be a flat rent or could it be per closing?

Thanks so much. The more you could explain about this the better. Thanks!

Yosef

[lcannister]

Kind of sad you are a now a Mortgage Broker and do not know the answer to this question or more importantly where to find the answer.

At least my reply may get your question back to the top and someone may come along and tell you where to find the info.

[HUD-1]

It is interesting that mortgage brokers have no experience requirements, no state licensing and no educational requirments. Originators can just put out a shingle and start selling mortgage products Maybe this is the year for change on that score given the state of the sub-prime industry. Regarding kickbacks:

RESPA'S statutes explained: consumer protections and prohibited practices

Section 8: kickbacks, fee-splitting, unearned fees

Section 8 of RESPA prohibits anyone from giving or accepting a fee, kickback or any thing of value in exchange for referrals of settlement service business involving a federally related mortgage loan. In addition, RESPA prohibits fee splitting and receiving unearned fees for services not actually performed.

Violations of Section 8's anti-kickback, referral fees and unearned fees provisions of RESPA are subject to criminal and civil penalties. In a criminal case a person who violates Section 8 may be fined up to $10,000 and imprisoned up to one year. In a private law suit a person who violates Section 8 may be liable to the person charged for the settlement service an amount equal to three times the amount of the charge paid for the service.

[You Are Guilty]

Originally Posted by HUD-1

It is interesting that mortgage brokers have no experience requirements, no state licensing and no educational requirments. Originators can just put out a shingle and start selling mortgage products Maybe this is the year for change on that score given the state of the sub-prime industry. Regarding kickbacks:

RESPA'S statutes explained: consumer protections and prohibited practices

Section 8: kickbacks, fee-splitting, unearned fees

Section 8 of RESPA prohibits anyone from giving or accepting a fee, kickback or any thing of value in exchange for referrals of settlement service business involving a federally related mortgage loan. In addition, RESPA prohibits fee splitting and receiving unearned fees for services not actually performed.

Violations of Section 8's anti-kickback, referral fees and unearned fees provisions of RESPA are subject to criminal and civil penalties. In a criminal case a person who violates Section 8 may be fined up to $10,000 and imprisoned up to one year. In a private law suit a person who violates Section 8 may be liable to the person charged for the settlement service an amount equal to three times the amount of the charge paid for the service.

Well put and the state law that applies is Banking Law § 6-l(p).