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MyFaithFirst
23 Posts |
 Posted - 02/24/2008 : 5:25:24 PM
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I am confused about how to legally pay a referral fee. I am thinking of building business referrals by showing my value to their business. I want them to hand my flyer to the customer who will need to refi their existing mortgage to buy whatever is being sold: pool, roof, improvements, etc.
Generally, the flyer would offer $500 or $1000 off the roofing job if they use XYZ Mortgage to finance the work. I would then pay the roofer or pool guy the $500 or $1000.
I know there is a way. How? |
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808
1963 Posts |
Posted - 02/24/2008 : 5:32:28 PM
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| do commercial loans |
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Loans4All
1082 Posts |
Posted - 02/24/2008 : 5:32:45 PM
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| You can entice a borrower with incentives under any circumstances---you can pay referral fees to anyone for financing arrangements not covered by RESPA (hard money, commercial, construction only loans, etc.) |
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MyFaithFirst
23 Posts |
Posted - 02/24/2008 : 5:55:49 PM
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| 808, Commercial loans? I don't see the connection to my question? |
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MyFaithFirst
23 Posts |
Posted - 02/24/2008 : 5:57:10 PM
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| Loans4all, Thanks for the response. The referral fee is for the pool contractor for referring the client to me, not the borrower. |
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mortgagemessiah
7907 Posts |
Posted - 02/24/2008 : 6:09:28 PM
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It doesn't matter. Nothing of any real value can be given as referral or kickback fee under section 8b of RESPA:
"No referral fees. No person shall give and no person shall
accept any fee, kickback or other thing of value pursuant to any
agreement or understanding, oral or otherwise, that business incident to or part of a settlement service involving a federally related mortgage loan shall be referred to any person."
8d defines "things of value":
Thing of value. This term is broadly defined in section 3(2) of
RESPA (12 U.S.C. 2602(2)). It includes, without limitation, monies,
things, discounts, salaries, commissions, fees, duplicate payments of a charge, stock, dividends, distributions of partnership profits,
franchise royalties, credits representing monies that may be paid at a
future date, the opportunity to participate in a money-making program,
retained or increased earnings, increased equity in a parent or
subsidiary entity, special bank deposits or accounts, special or unusual banking terms, services of all types at special or free rates, sales or rentals at special prices or rates, lease or rental payments based in whole or in part on the amount of business referred, trips and payment of another person's expenses, or reduction in credit against an existing obligation. The term ``payment'' is used throughout Secs. 3500.14 and 3500.15 as synonymous with the giving or receiving any ``thing of value'' and does not require transfer of money.
RESPA - Learn it, know it, live it!
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sc312001
986 Posts |
Posted - 02/24/2008 : 6:26:22 PM
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| I think the rule of thumb was $25 or less for "value". I think the do commerical comment means they are not regulated by RESPA & the rules do not apply. Kickbacks are forbidden. Period. Not the same as co-brokering. Now, maybe if the pool gut got licensed & worked on the loan file, you'd have some options. |
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mortgagemessiah
7907 Posts |
Posted - 02/24/2008 : 6:32:23 PM
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| Commercial lending is not covered under RESPA. You can give referral fees all day long if they are commercial loans. |
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Scrooge McDuck
7552 Posts |
Posted - 02/24/2008 : 6:42:27 PM
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can you post it on the hud? what if you disclose it?
btw, i think the fact that this guy knows his clients have the money and he gets to put a pool in should be good enough. its good business for everyone. most people will allocate their christmas bonus for the new pool, then the boss makes cut backs, and then they might just get enrolled in the jelly of the month club instead of getting cash. where would they be then? |
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808
1963 Posts |
Posted - 02/24/2008 : 7:04:31 PM
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quote:
Originally posted by MyFaithFirst
Loans4all, Thanks for the response. The referral fee is for the pool contractor for referring the client to me, not the borrower.
that's where the problem is, read up on RESPA. FYI, RESPA violations are serious and not something you wanna be on the wrong side of. Handing out flyers advertising what you propose to do is career suicide. |
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darkstar
15996 Posts |
Posted - 02/24/2008 : 7:31:00 PM
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>>>>Handing out flyers advertising what you propose to do is career suicide.
Agree, but, like that flyer, you still see people posting blatant violations almost daily here...
Ray, call me tomorrow and I will tell you how to do it "legally"... |
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KHufford
5290 Posts |
Posted - 02/24/2008 : 7:35:35 PM
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quote:
Originally posted by 808
quote:
Originally posted by MyFaithFirst
Loans4all, Thanks for the response. The referral fee is for the pool contractor for referring the client to me, not the borrower.
that's where the problem is, read up on RESPA. FYI, RESPA violations are serious and not something you wanna be on the wrong side of. Handing out flyers advertising what you propose to do is career suicide.
MAN...CHILL OUT. You sound like you think he is trying to commit grand larceny or something.
His flyer's wouldn't say "Use acme mortgage co. for your pool loan and I will kick the pool guy a fee"!
It would say "Please check out acme mortgage for all your pool loan/ equity line needs, xyz pools will also take 500 bucks off the price of our job"
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808
1963 Posts |
Posted - 02/24/2008 : 10:02:52 PM
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quote:
Originally posted by KHufford
quote:
Originally posted by 808
quote:
Originally posted by MyFaithFirst
Loans4all, Thanks for the response. The referral fee is for the pool contractor for referring the client to me, not the borrower.
that's where the problem is, read up on RESPA. FYI, RESPA violations are serious and not something you wanna be on the wrong side of. Handing out flyers advertising what you propose to do is career suicide.
MAN...CHILL OUT. You sound like you think he is trying to commit grand larceny or something.
His flyer's wouldn't say "Use acme mortgage co. for your pool loan and I will kick the pool guy a fee"!
It would say "Please check out acme mortgage for all your pool loan/ equity line needs, xyz pools will also take 500 bucks off the price of our job"
his post says he want's to legally pay a referral fee. I just don't wanna see the guy unknowingly get in a legal bind over lack of RESPA knowledge. |
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darkstar
15996 Posts |
Posted - 02/24/2008 : 10:13:18 PM
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| Looks like he did it the right way, he asked, and because he did, he'll get the answer and increase his success!... |
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MyFaithFirst
23 Posts |
Posted - 02/24/2008 : 11:41:37 PM
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Hey Guys! I really appreciate the feedback. LOL. What if i hired the pool contractor as a junior loan officer? Employment agreement would pay him $1000 for each fully completed mini-1003. As the senior LO, I would take it from there. The pool contractor makes an extra $1000 on the job. I give up a little to get a little and another referral source.
Otherwise, my flyer would give the $1000 to the homeowner with the pool contractor using this fact to sell to the homeowner. :) |
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MarieS
233 Posts |
Posted - 02/25/2008 : 03:34:06 AM
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| Now your just going thru way to much trouble to get leads. Just buy them. |
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Scrooge McDuck
7552 Posts |
Posted - 02/25/2008 : 03:48:46 AM
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quote:
Originally posted by MyFaithFirst
Hey Guys! I really appreciate the feedback. LOL. What if i hired the pool contractor as a junior loan officer? Employment agreement would pay him $1000 for each fully completed mini-1003. As the senior LO, I would take it from there. The pool contractor makes an extra $1000 on the job. I give up a little to get a little and another referral source.
Otherwise, my flyer would give the $1000 to the homeowner with the pool contractor using this fact to sell to the homeowner. :)
actaully, contractors and stuff as LOs is alos a no no. |
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MyFaithFirst
23 Posts |
Posted - 02/25/2008 : 04:02:27 AM
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| $1000 for referral is a little much. LOL. I just suck at leads. Stephen is helping but meanwhile .... $$$$ down the drain. I think with you guys kind words (hahaha) and insights on how to handle some of the objections, I will be ok. |
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acapwell
140 Posts |
Posted - 02/25/2008 : 04:44:30 AM
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| Don't even take the chance if it falls under RESPA, especially under the recent scrutinization of broker practices. Stick to commercial loans if referral fees turn you on. |
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darkstar
15996 Posts |
Posted - 02/25/2008 : 05:14:02 AM
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Don't take a chance?...You type that like there is risk involved...Shouldn't he do exactly what he's doing, proper due diligence, and THAN make the determination if he can do it compliantly?...
I'm speaking from extensive knowledge and experience dealing with RESPA, I created a compliant pay per funding program as well as using non-profits to call the DNC for me, you're "advise" to discourage him from growing his business is short-sighted and just plain bad advise...
It's like co-brokering, if done properly, it's totally legal, but when someone posts in regard to it, you can clearly see how many people have no clue how it CAN be done...Instead of teaching or sitting back and learning, they discourage....
I do want to add, I wouldn't put but so much effort into this type of marketing and instead of offering a "fee" try to show them how YOU can help THEIR business grow using your service, not how you can pay them for referring people, doesn't quite hit the same hot button in business owners...I think the thought of them selling "more" pools would be more incentive than an incentive to the borrower or homeowner, regardless of how that helps the pool company owner... |
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mganovsky
1739 Posts |
Posted - 02/25/2008 : 09:00:45 AM
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| You can not pay a refeeral fee for business, but you can give a lender credit to the borrower then at closing have the borrower tell the title company to disburse such and such to XYZ company for the pool or what ever. Any thoughts on this to the folks who know RESPA real well. |
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MyFaithFirst
23 Posts |
Posted - 02/25/2008 : 11:54:03 AM
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| Mark, great talking with you. Keep my number and stay in touch! |
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mganovsky
1739 Posts |
Posted - 02/25/2008 : 12:38:44 PM
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| will do Ray, give me a call when you want to come aboard with Apex |
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WorldWideWayne
1976 Posts |
Posted - 02/25/2008 : 1:18:46 PM
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quote:
Originally posted by mganovsky
You can not pay a refeeral fee for business, but you can give a lender credit to the borrower then at closing have the borrower tell the title company to disburse such and such to XYZ company for the pool or what ever. Any thoughts on this to the folks who know RESPA real well.
If the HUD shows a disbursement to the client, but the check is cut to XYZ company, is that not a bit of fraud? I'm thinking fraud. |
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slants
4253 Posts |
Posted - 02/25/2008 : 1:24:04 PM
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quote:
Originally posted by WorldWideWayne
quote:
Originally posted by mganovsky
You can not pay a refeeral fee for business, but you can give a lender credit to the borrower then at closing have the borrower tell the title company to disburse such and such to XYZ company for the pool or what ever. Any thoughts on this to the folks who know RESPA real well.
If the HUD shows a disbursement to the client, but the check is cut to XYZ company, is that not a bit of fraud? I'm thinking fraud.
No the check made out to the pool company can be itemized on the HUD no differently than if borrower is instructing the closing agent to pay off a consumer debt throught the closing. Just cutting a separate check for a 3rd party payoff. Sounds legit. |
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Mortaxx
251 Posts |
Posted - 02/25/2008 : 1:27:04 PM
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quote:
Originally posted by mganovsky
You can not pay a refeeral fee for business, but you can give a lender credit to the borrower then at closing have the borrower tell the title company to disburse such and such to XYZ company for the pool or what ever. Any thoughts on this to the folks who know RESPA real well.
You know I actually had a client do exactly that at closing. On the HUD we indicated that $16K was to be paid to ABS Company for ... I think it was research land analysis... or something like that. We just provided the invoice to the title company to pay off of and it was a done deal. |
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WorldWideWayne
1976 Posts |
Posted - 02/25/2008 : 1:28:00 PM
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But that's not what he said. He said to put it on the HUD to the borrower but cut the check to the pool company. That's how I read it. I don't think that is kosher.
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Mortaxx
251 Posts |
Posted - 02/25/2008 : 1:54:26 PM
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| Oh nooo... I guess I missed that part. I think he should just have it go directly to the Pool company. It should flow smoothly. |
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slants
4253 Posts |
Posted - 02/25/2008 : 2:10:26 PM
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I think that's what Mark said - give a broker credit to the borrower which borrower can apply toward payment to the pool co. It does not bypass the hud if being disbursed by the closing agent. That's how I read it:
quote:
Originally posted by mganovsky
You can not pay a refeeral fee for business, but you can give a lender credit to the borrower then at closing have the borrower tell the title company to disburse such and such to XYZ company for the pool or what ever. Any thoughts on this to the folks who know RESPA real well.
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