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ski2313
751 Posts |
 Posted - 02/14/2008 : 09:12:30 AM
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DISCLAIMER: This topic contains co-broker related content. Please note that the term co-brokering is often used in inquires that involve illegal fee splitting or kick backs. This site does not condone these activities. Details related to Respa Section 8 violations can be found here. If you feel the content of this topic may be in violation of any law, please report it to the moderator by clicking the red notification icon above. Thank You.
First, a couple of facts..
My friend and I are both licensed in the state of WI to originate mortgages, and are actively employed.
He is slowly migrating to doing strictly commercial, and wants to hand of all of his residential deals to me so that he gets to free up his time to focus on his commercial stuff.
The question is..
Can we legally split the commission/ysp/points 50/50?
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mganovsky
2074 Posts |
Posted - 02/14/2008 : 09:17:05 AM
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| If you both work for the same company that would be fine, otherwize it is a Respa Violation |
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lucky1s
3620 Posts |
Posted - 02/14/2008 : 09:18:38 AM
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That is the beauty of a net branch.
I have 900 agents I can c0-broker with. |
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jillstatz
657 Posts |
Posted - 02/14/2008 : 09:24:00 AM
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| I don' think that Wisconsin allows co-brokering. check with WDFI to find out that information www.wdfi.org |
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ski2313
751 Posts |
Posted - 02/14/2008 : 09:39:58 AM
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I've been through every page of WDFI, and it simply says "refer to HUD/RESPA for clarification".
RESPA is designed to prevent "bird-dogging" like paying realtors to send you deals, etc..
If my buddy gathers the docs and signatures, sends me the information, and directs his customer over to me, he has actively participated in the loan process, and can be paid according to RESPA..
As long as it's on the HUD as POC, it's ok (the way I currently understand it).
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ski2313
751 Posts |
Posted - 02/14/2008 : 09:40:50 AM
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FHA is a different story.. they don't allow co-brokering of loans if one of the brokers is not FHA licensed.. Not sure if they even allow it period
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jillstatz
657 Posts |
Posted - 02/14/2008 : 09:50:42 AM
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quote:
Originally posted by ski2313
FHA is a different story.. they don't allow co-brokering of loans if one of the brokers is not FHA licensed.. Not sure if they even allow it period
You may want to call WDFI just to clarify..unless rules have changed we were told we were not allowed to co-broke in Wisconsin unless it was between 2 LO's from the same company. |
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ski2313
751 Posts |
Posted - 02/14/2008 : 09:52:53 AM
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I will give them a call.
Currently we both do work at the same company, but that may possibly be changing shortly..
He may just wind up having to give those deals to someone else under the same roof |
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slants
4274 Posts |
Posted - 02/14/2008 : 10:03:08 AM
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quote:
Originally posted by ski2313
I've been through every page of WDFI, and it simply says "refer to HUD/RESPA for clarification".
RESPA is designed to prevent "bird-dogging" like paying realtors to send you deals, etc..
If my buddy gathers the docs and signatures, sends me the information, and directs his customer over to me, he has actively participated in the loan process, and can be paid according to RESPA..
As long as it's on the HUD as POC, it's ok (the way I currently understand it).
Permissible under Respa so long as Referring Broker performs 5 of the 13 qualifying services. CA Association of Realtors has a form in their RE documents for cooperating Broker compensation. If agents do not work under the same broker, the agreement and compensation has to occur between the brokers and not the LO's:
Compliance with RESPA. Referring broker must performe sufficient services to qualify for compensation under the safe harbor provisions of the Real Estate Settlement Procedures Act and Regulation X contained in the Statement of Policy 1999-1 Regarding Lender Payments to Mortgage Brokers, Federal Register Docket No. FR-4450-N-01 and Statement of Policy 2001-1 Clarification of Policy 1999-1 Regarding Lender Payments to Mortgage Brokers, Federal Register Docket No. FR 7414-N-01, including taking the application and providing at least five out of the other thirteen qualifying service categories:
A. Initiating/ordering VOE’s (verification of employment) and VOD’s (verifications of deposits)
B. Initiating/ordering requests for mortgage and other loan verifications
C. Initiating/ordering appraisals
D. Initiating/ordering inspections or engineering reports
E. Providing disclosures (truth-in-lending, good faith estimate, others) to the Borrower
F. Ordering legal documents
G. Determining whether the property was located in a flood zone or ordering such service
H. Analyzing the Applicant’s income and debt and pre-qualifying the Applicant to determine the maximum mortgage that the prospective Borrower can afford
I. Educating the Applicant in the home-buying and financing process, advising the Applicant about the different types of loan products available, and demonstrating how closing costs and monthly payments would vary under each product
J. Collecting financial information (tax returns, bank statements) and other related documents that are part of the application process
K. Assisting the Applicant in underwriting and clearing credit problems
L. Maintaining regular contact with the Applicant, RealtorsÒ and Lender between application and closing to apprise them of the status of the application and to gather any additional information as needed
M. Participating in the loan closing |
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Chris Clark
5966 Posts |
Posted - 02/14/2008 : 10:30:30 AM
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It is not considered co-brokering if you both work for the same company. That's just considered the splitting of a commission. The word co-broker means that two different brokers (companies) are being paid for working on one loan.
Assuming that Wisconsin allows co-brokering, and one of you moves to a new company, both companies would need to be licensed in the state that the deal takes place (if you're co-brokering loans in Wisconsin, you both need to be licensed in Wisconsin). If Wisconsin says to refer to RESPA for co-brokering guidelines, then that is what you would do. RESPA allows co-brokering as long as both parties do bona fide work on the loan. They have a list of certain activities that can be done by either party and specify that at least 5 of the activities have to be done in order to qualify for payment under the co-brokering of a loan. The payment would also need to be shown on the HUD1; it does not need to be marked POC.
As of current, FHA does NOT allow co-brokering of loans. They will, however, allow the payment of a "consulting" fee to a non-licensed broker, which must also be shown on the HUD1 and must come from the borrower's own funds. |
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