RESPA

The Real Estate Settlement Procedures Act is a very boring topic. However, it is necessary. A 1974 law, it states the buyer gets to know what they are spending their money on everyone is to disclose  any affiliated relationships between the third parties helping them.

For example, if a licensed loan officer had a real estate license and handled both the loan and the sale, the buyer would be informed their agent made money in both cases. I am over-simplifying, but that is the gist--money and gifts do not pass hands for those of us who play in the real estate industry.

What this truly means is real estate agents and loan officers do not get kickbacks from each other or anyone else. Anyone. That is, unless they want to be in a heap of trouble. This is as simple as an insurance agent going to lunch and picking up the tab for a loan officer. Each better pay for their own. Or a title officer giving a thank you gift to real estate agent. It better be a pad of paper with the title officer's name and company embossed all over it.

There are no referral fees between industries (the exception is a real estate brokerage giving another real estate brokerage a fee for a referral, but not giving Mary Doe money because their best friend's sister wants to buy a home). Or at least, that is the rules that have been in place for 44 years.

Recently I have run into a few folks (credit repair companies, home warranty company representative and a loan officer) who have forgotten these rules. This disturbs me. Not only is it illegal, but it really sheds my profession in a bad light. Sales people, real estate agents in general, already have a reputation as shady. I consider it a personal mission to raise the bar of professionalism for my industry. The credit repair chick was offended when I told her I would not take a referral fee--it is illegal. "Perhaps a gift card then..." she replied. Perhaps I won't be working with her. I am certainly not going to pay her for clients either.