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Need a CA Lender who will kick back


Champion80
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Whats happening, I had a close friend that left the country for a little while, I am an Insurance agent and he and I worked together a lot of referrals in the last couple years, so I am used to kickbacks. I am looking for a new partner for now, and I am going to buy a home myself very soon. I am hoping to close on or around 07/01/2008.

Thanks.

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Yes, thanks for bringing that up, that is important, however, in our instance we were working together to help our clients, I only work with people that have high integrity. There is no funny business going on, I know there are those out there that can some how swallow the pill of taking advantage of others. But I am the polar opposite. But As far as I have understood the law you are speaking of, if I am helping him do is job,and referring clients to him and helping him get the loans completed, then it is ok for him to pay me some of his earnings...??

Now in regards to my home, I can see where it might be a problem? But again, if someone that works with, or is a paid employee for example for a loan company and they have their home loan done there and they do most of the work, can they not get paid a commission on their own loan? Thanks Charles.

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"... if I am helping him do is job, and referring clients to him and helping him get the loans completed, then it is ok for him to pay me some of his earnings...??"

Well, that is a fine point of the law. I believe that there are 12 parts to putting a loan together. (I don't know where my list is of what those items are, but maybe some of the other LO's that come here have it)

If you actually work for him and you are doing at least 6 of these things then he can pay you for doing that work. If it looks like he is just paying you for referrals, then he can have a problem. According to RESPA, payments for referrals is against the law, but getting paid for work that you do => 50% of the work to get a loan done, is ok.

"Now in regards to my home, I can see where it might be a problem? But again, if someone that works with, or is a paid employee for example for a loan company and they have their home loan done there and they do most of the work, can they not get paid a commission on their own loan? ".

I don't know the answer to that. I know that in my case the people I work for told me to go to another broker, and that broker checked with lenders to make sure that it was ok. The loan ended up going to an investor that we don't sell loans to, just to make sure that there were no issues. It could be that my company is ultra conservative-which they are- or maybe that is a general policy. Again, other LO's should be able to clear this up.

Charles

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We have it set up to where we can pay a Realtor or affiliate (they need not be on the books as an employee) a referral fee. However, in order to be RESPA-compliant, the following need to happen: the affiliate must take the 1003 loan application and then submit it to us, and their fee is paid through escrow. If those two things happen, a payment is legal and compliant.

As the market has changed, and we are no longer chasing after refinances, on every purchase I close there is the opportunity for an insurance agent to write a policy, and sometimes not just for the house only. I do have a few folks I feed here and there but I have to say it is rare I receive a deal from my insurance contacts. My bread and butter is Realtor referrals, but I digress.

We are a CA only broker (northern California though, Sacramento) and would be interested pursuing a synergistic relationship, which of course would have to be aboveboard as we are a licensed FHA correspondent (for 19 years) and would prefer to stay that way. PM me if you'd like to take things a bit further.

PS

A loan officer writing his own file is extremely suspect in the current lending environment. I am fairly sure Fannie/Freddie prohibits it, unsure about government, know some sub primes did/do allow it.

That aside, as lending is considered to be a unstable industry, someone applying for a mortgage with a job as a loan officer would garner intense scrutiny of their income documentation. An underwriter would take a conservative stance.

All that aside, OP, it is very legal for you to be an employee of the company and be paid 1099 for bringing business into the door. There are just rules that must be followed. That position can be a telemarketer or whatever, basically, "originator" and is what I was brought into the business years ago as.

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Here is what I just found on the internet:

http://www.bankersonline.com/lending/gurus_ldng071502k.html

Is it a RESPA violation for a mortgage lender to pay a percentage of the loan commission to the Realtor?

by Andy Zavoina, BOL Guru

BIO AND CONTACT INFO

Question: Is it a RESPA violation for a mortgage lender to pay a % of the loan commission to the realtor if the realtor actually takes the loan application and is disclosed on the settlement statement?

Answer: You could have a serious problem here. HUD maintains that "If the payment of a thing of value bears no reasonable relationship to the market value of the goods or services provided, then the excess is not for services or goods actually performed or provided."

They have also defined examples of what is entailed in the applications process. These include:

(a) Taking information from the borrower and filling out the application;

(B) Analyzing the prospective borrower's income and debt and pre-qualifying the prospective borrower to determine the maximum mortgage that the prospective borrower can afford;

© Educating the prospective borrower in the home buying and financing process, advising the borrower about the different types of loan products available, and demonstrating how closing costs and monthly payments could vary under each product;

(d) Collecting financial information (tax returns, bank statements) and other related documents that are part of the application process;

(e) Initiating/ordering VOEs (verifications of employment) and VODs (verifications of deposit);

(f) Initiating/ordering requests for mortgage and other loan verifications;

(g) Initiating/ordering appraisals;

(h) Initiating/ordering inspections or engineering reports;

(i) Providing disclosures (truth in lending, good faith estimate, others) to the borrower;

(j) Assisting the borrower in understanding and clearing credit problems;

(k) Maintaining regular contact with the borrower, realtors, lender, between application and closing to appraise them of the status of the application and gather any additional information as needed;

(l) Ordering legal documents;

(m) Determining whether the property was located in a flood zone or ordering such service; and

(n) Participating in the loan closing.

Doing one item is not sufficient. HUD said that it generally would be satisfied that sufficient origination work was performed to justify compensation if it found that the lender's agent or contractor took the application information and the lender's agent or contractor performed at least five additional items on the list above.

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Section 8(a) of RESPA, prohibits any person from giving and any person from accepting any fee, kickback, or other thing of value pursuant to any agreement or understanding that business shall be referred to any person. (See 12 U.S.C. 2607(a).) Section 8(B) also prohibits anyone from giving or accepting any portion, split, or percentage of any charge made or received for the rendering of a settlement service other than for services actually performed. (12 U.S.C. 2607(B).) Section 8© of RESPA provides, however, that nothing in Section 8 shall be construed as prohibiting the payment to any person of a bona fide salary or compensation or other payment for goods or facilities actually furnished or services actually performed. (12 U.S.C. 2607©(2).)

This is detailed at http://www.hud.gov/offices/hsg/sfh/res/resp0222.cfm

This mostly talks about realtors getting paid a portion of the loan proceeds, so maybe it is not a big concern for others that are not actually in the Real Estate business. I have a friend that set up a program so he could pay Realtors and have them certify that they had done the correct minimum amount of work, last time I talked with him about it he had not had a lot of success getting the Realtors to work this way with him. Since business has slowed down for a lot of people, maybe now more are willing.

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RESPA violations have interesting consequences, I just don't remember what they are. And don't really want to know.

Charles

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Wow guys, thanks for the info there, that clears some confusion on my part. I try and look out for everyone invovled in every situation, I will read up more on the laws to make sure the referrals I pay out are compliant as well. Of course as an Insurance agent, I certainly do not make much on one Home policy!!! :) So it is more of a numbers game for me.

And on this side the only big no no I am well aware and have not practiced the idea of having my referee's tell their clients they HAVE to go with us. The great part about the Insurance Company I represent their rates are great in CA, I can quote against five other companies and I we come out on top most of time, without doubting the quality of the company my clients are going with, so it has been a win win situation.

Thanks Again Charles, and Oompaloompa. BTW, Oomp, you live in Nor Cal? I grew up in Sac

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Charles, thank you for your research. Though I don't have anything to prove to you, I assure you that I am familiar with the pertinent parts of the law, and any present or future referral agreement through my company is of course done in full disclosure and in 100% compliance with all governing bodies.

We have unfortunately had to delve very deep into the particular legal points here, due to our affiliation with Lending Tree and other 3rd party lead providers. It is also a cause for concern when paying independent contractor telemarketers or originators. Respa violations generally lead to investigations and hearings which nobody needs right now. My main point is that we are a FHA correspondent, something of a halo in this present market. We protect this at all costs and it would be foolhardy to jeopardize this for a kickback. Every week, me and my broker go through all the people soliciting us to co-broker and illegally piggyback on our FHA designation and report them to HUD

Champion- Check your private messages

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