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Old 05-04-2006, 11:53 PM
sillygrin sillygrin is offline
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Join Date: May 2006
Posts: 5
Realtor referral fees are illegal

Realtor referral fees are illegal


As mentioned in a recent thread, many Realtors and Real Estate Agents are being paid by mortgage lenders(brokers AND banks) for referring business to them. This is against the law per Section 2607 of the RESPA(Real Estate Settlement & Procedures Act) guidelines within HUD. See this at


Sec. 2607. Prohibition against kickbacks and unearned fees

(a) Business referrals

No person shall give and no person shall accept any fee, kickback,
or thing of value pursuant to any agreement or understanding, oral or
otherwise, that business incident to or a part of a real estate
settlement service involving a federally related mortgage loan shall be
referred to any person.

(b) Splitting charges

No person shall give and no person shall accept any portion, split,
or percentage of any charge made or received for the rendering of a real
estate settlement service in connection with a transaction involving a
federally related mortgage loan other than for services actually

If you read this you would see it says...No person shall give...anything of value and that means, NO money,NO ballgame tickets, NO free lunches or dinners...NADA! Nothing! paid "below the table" OR above!
Isn't it enough to get the loan closed for the borrower in a timely manner for a fair price?

The truth is, it is happening everywhere and the borrower is usually the one who pays in the long run. If you want the absolute lowest interest rates offered...keep searching the internet and take your lumps when they come. If you want a fair deal for a fair price, do your homework and work with someone who has a good reputation and knows the industry, try to meet them face-to-face. Treat your mortgage as a financial instument just like your retirement fund, wake up...NO FREE LUNCH! PERIOD!

Have a nice day

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Old 12-31-2006, 01:33 AM
Steinert Steinert is offline
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Join Date: Dec 2006
Posts: 2
Re: Realtor referral fees are illegal

Yes, it is illegal to pay for referrals. However, realtors who provide actual lending services may receive compensation.

In a February 14th, 1995 memorandum from the Assistant Secretary of Housing at HUD, "HUD generally would be satisfied that no RESPA violations occur if it is found that: the lender's agent or contractor took the application, the fee charged is reasonably related to the market value of the services performed, and the lender's agent or contractor performed at least 5 five of the following services...[see memorandum for the 12 possible service options]."

In essense, realtors who perform actual work may receive compensation. Those who get a referral without doing (much or any) work cannot receive compensation.

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