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     | Saturday, January 06, 2001 - 12:35 pm  What does "CBA or CBO" mean as used on this web page in the paragraph discussing "Referral fees paid for residential real estate are prohibited" etc. ??? i.e. "unless you have a CBO or CLO " thanks Moose
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| | Saturday, January 06, 2001 - 06:44 pm You must be referring to my assessment of HUD on http://www.bayhouse.com/define.shtml#HUD "HUD works for the big corporations, endorsing CBAs (Controlled Business Arrangements) to legalize kickbacks. When you have a problem with a Mortgage Broker or Lender, send your complaint to: ...." RESPA contains regulations prohibiting referral fees involving mortgages unless you have a CBA. The intent was to eliminate "kickbacks," but big biz got their exemption. From HUD's http://www.hud.gov/fha/sfh/res/res0607c.html you can read the history and various amendments: "General Background Section 8 (a) of the Real Estate Settlement Procedures Act (RESPA) prohibits any person from giving or accepting any fee, kickback, or thing of value for the referral of settlement service business involving a federally related mortgage loan. 12 U.S.C. Sec. 2607(a). Congress specifically stated it intended to eliminate kickbacks and referral fees that tend to increase unnecessarily the costs of settlement services. 12 U.S.C. Sec. 2601(b)(2). After RESPA's passage, the Department received many questions asking if referrals between affiliated settlement service providers violated RESPA. Congress held hearings in 1981. In 1983, Congress amended RESPA to permit controlled business arrangements (CBAs) under certain conditions, while retaining the general prohibitions against the giving and taking of referral fees. Congress defined the term ``controlled business arrangement'' to mean an arrangement: [I]n which (A) a person who is in a position to refer business incident to or a part of a real estate settlement service involving a federally related mortgage loan, or an associate of such person, has either an affiliate relationship with or a direct or beneficial ownership interest of more than 1 percent in a provider of settlement services; and (B) either of such persons directly or indirectly refers such business to that provider or affirmatively influences the selection of that provider. ..." There's lots more on that page. It's another great example of corporate power, they get what they want.
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| | Sunday, January 07, 2001 - 08:25 am To: Christine Baker, Thanks for your note. My real question is: If I simply refer residental mortgage loan business to a Lender and a deal closes without my involvement other than the act of "putting" two parties together whereas I am not receiving compensation from the buy or sell of the real estate (primary residence), nor am I involved with the Title Company in any way, May the Lender pay me a "referral fee" without violating some Reg. I am not a Real estate Broker, however would it help if I became a licensed Loan Broker??
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| | Sunday, January 07, 2001 - 11:07 am The only way you can get paid is if you actually perform a service. Becoming a loan broker could help, because you then COULD provide a legitimate service, such as process the loan, compile the loan package, etc. As far as I know, you cannot legally receive a *referral* fee unless you utilize the CBA. However, depending on State law, you can often legally receive *finder's* fees from the real estate broker (not lender) without having to be licensed. Check your STATE law!
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| | Monday, January 08, 2001 - 06:03 pm Christine, I think the "finders fee" is alos not allowed by RESPA. Most states require that you be a employee of the company that pays you or be individually licensed like CA and other states. If this is going to be a regular occurance. i woudl sugest that Gerald become a part time employee of this company. Thus if he is not required by state law to be individually licensed, he could probably be paid a fee for his marketing service service. I would recomend that he not be paid on closed loans but a smaller amoutn on leads provided. Do allways check with your local governing body and possibly and Atty. jsut to be safe.
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| | Tuesday, January 09, 2001 - 12:47 pm The finder's fee I referred to is ONLY applicable to real estate SALES, not loans. It is NOT in violation of RESPA, but I know that many States have their own laws prohibiting finders fees. It was perfectly legal in California as of a couple of years ago, the finder could NOT be involved in any negotiations. I also used to refund part of my SALES commission to my clients, and I learned that in many States that's also illegal. It's ok in California, but many brokers CLAIM it's illegal so they don't have to give away any cash. Another little twist is giving a borrower a lower loan fee for referrals.
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