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RESPA Section 8 and Your Lender Relationships

Agents and loan officers refer business to each other every day, and that is fine. What federal law forbids is paying for it. RESPA Section 8 is short, but the regulation behind it defines its terms broadly enough to catch arrangements that do not look like payments at all.

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The rule

No person may give or accept any fee, kickback or thing of value under an agreement or understanding that settlement service business on a federally related mortgage loan will be referred. A referral is not a compensable service. And no one may split a settlement charge except for services actually performed.

Three definitions that make it broad

Thing of value

Money, but also discounts, trips, paying someone's expenses, services at special or free rates, rent based on business referred, and the opportunity to join a money-making program.

Agreement

It need not be written or spoken. A practice, pattern or course of conduct can establish it, and repeated value tied to referral volume is evidence of one.

Referral

Any action that affirmatively influences a consumer's choice of provider - and any time the consumer is required to use a particular provider.

What is allowed

Payment for real work at fair value: a bona fide salary, or payment for goods or facilities actually furnished or services actually performed.

Normal promotional and educational activities that are not conditioned on referrals and do not pay expenses the agent would otherwise carry.

Cooperative brokerage splits between real estate agents and brokers. The regulation says plainly this exemption does not cover fee arrangements between real estate brokers and mortgage brokers.

Co-marketing, shared events and joint advertising are where most questions arise. The test is whether each side pays its fair share for what it gets. When in doubt, ask your broker's compliance contact before, not after. The book covers how to build a lender relationship worth referring to without any of this; for the closing-week rule agents trip over most, see the 3-day Closing Disclosure rule.

Rule text: Regulation X, 12 CFR 1024.14, Prohibition against kickbacks and unearned fees (RESPA Section 8, 12 U.S.C. 2607). This is general information for agents, not legal advice.

RESPA FAQ

Can a lender pay a real estate agent for referrals?

No. RESPA Section 8 prohibits giving or accepting any fee, kickback or thing of value for referring settlement service business on a federally related mortgage loan.

Does RESPA allow co-marketing between agents and lenders?

Payments for goods, facilities or services actually furnished are allowed at fair value, and normal promotional activities are allowed if not conditioned on referrals and not covering the agent's own expenses. An arrangement that is really payment for referrals is not.

Does an agreement to refer have to be written to violate RESPA?

No. The regulation says it may be established by a practice, pattern or course of conduct, and repeated value tied to referral volume is evidence of one.