RESPA Section 8
Ok, my company and I are wanting to hold a mortgage fundraiser for some schools and churches in our area. By them referring business to us through their organization, we will in turn give them a $500 referral fee (or whatever you want to call it). Everything will be disclosed with the borrowers and they will indeed know that our company will be giving their organization or school a gift for them deciding to do their refinance or purchase loan through us. Are we violating Section 8 of RESPA if we disclose all fees associated with the transaction and give the organization a referral fee or whatever you want to call it? Even if we disclose, can we still be cited for a Secttion 8 violation of RESPA?
Your post is unclear as to exactly what your co's role in this would be, and what it is you want to do, or why you think that activity might subject you to charge of violation of RESPA.
Best thing you could do is pay a lawyer a few dollars to give you a researched legal opinion.
Generally speaking, failing to disclose is a violation, while disclosing anything is not.
Do you want to refresh my memory as to what Sectio 8 of RESPA is(or post verbatim?)
Section 8 of RESPA is basically there to protect the borrowers from getting ripped off by the lenders. The premise behind it is that it is a violation of RESPA to receive kickbacks or referral fees for referring business to a lender...basically. My co's role would be to ask a church, nonprofit organization, etc. to solicit their members to do loans; refinances and purchase loans through my mortgage company. By the organization doing this we will give the organization that refers us the business a $500 donation or referral fee. The borrowers know that by doing their loans with us, we will be giving the money (out of our commissions) back to the philathropic organization that sent us the loan. Therefore, we are disclosing everything and the borrower will know that the money that we make on a loan, $500 of which will be donated by our company back to the organization. Are we violating Section 8 of RESPA although we are disclosing everything? Even if we offer a donation to the organization that referred us the business, we are still in violation? Just wanted some input on this...thanks for any help given!
If I were hired to brief the law on this, the first thing I'd do is go to USCA (US Code Annotated) at the law library, and find RESPA, then Section 8, then look at the case decisions under it, in the annotations.
You can do the same thing very easily, and quickly see all the reported (Appellate) decisions on the issue.
I'd advise you, if no such decisions are found, to proceed, as long as you do openly, totally disclose everything...as I said earlier, people get in trouble for what they conceal, not what they disclose.
Obviously the thrust of RESPA and Sec 8 is to prevent illegal collusion and fraud by stopping the kickbacks to the crooked mtg broker who's obviously NOT openly shopping the best markets for his borrowers...and not disclosing much about his activities.
Conceivably you could get a "cease & desist letter" from HUD or somebody else but I'd bet it never happens.
Do you hold a Mortgage Lender or Broker license?
In Colorado, there are no licensure qualifications for mortgage brokers or lenders. So, to answer your question...no, I am not a licensed broker.
Did you ever get anywhere with this? I am looking to do something similar with local non-profit organizations as a fund raiser. I came across your post while researching the subject. Please let me know if you were able to get a thumbs up/down on making donations from profit.
Would it make any difference if the customer chooses the charity?
Here is a link to site that has information about this issue:
http://www.respanewsupdate.com/
Scroll down to the presentation under the "MAKING DONATIONS" heading.