Legal FAQs for REALTORS®
— Brokerage Liability Issues
Real Estate Settlement Procedures Act (RESPA)
Can a lender advertise on my website? (Updated Sept. 22, 2014)
Yes, as long as you follow the rules set out in the Real Estate Settlement Procedures Act (RESPA). These rules come into play any time that a real estate broker in a position to refer mortgage business to a lender is paid a “thing of value” by the lender.
A broker may charge a lender a flat fee to place the lender’s banner ads or hyperlinks on the broker’s website, but the payment must be reasonable and commensurate with the value of the service. Some brokers charge a small fee every time someone clicks through to the lender’s website. This appears permissible under RESPA guidelines as long as the fee is minimal and not tied to whether that click results in a loan.
A transactionally based fee is prohibited by RESPA. For example, a broker could not charge the lender a fee for every click that results in a closed loan.
Can a brokerage allow a mortgage company to sponsor a luncheon that offers CE for its agents? (updated March 23, 2015)
It depends. A mortgage company or title company sponsoring an educational event to promote its services can do so as long as the cost associated with the event doesn’t cover any of the agents’ other expenses they would otherwise have to pay, such as the cost of the CE credit. The mortgage company can’t sponsor the luncheon on the condition that it will receive referrals, either. And the company must promote its services during the event to qualify for the Real Estate Settlement Procedures Act (RESPA) advertising exemption.
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