Has anyone come up with a creative LEGAL way to make money off of referrals to mortgage brokers? Some people are doing "affiliated marketing" relationships. Other then just passing leads back and forth?

Now the vampires are looking to pray on the mortgage brokers! The real estate agents not enough for you? High Quality Leads!!! RIIIIIGHT. So just how do you screen these high quality leads and for what parent company..

I wonder seeing how RESPA protects the commissions on mortgage from referral fees if the banks ever get into RE will they say it protects them there to?

Right now almost 20% of california realtors are providing very competitive loans for their clients. That number should keep climbing, so by the time bankers get into RE, it'll be too competitive for them to survive. We do loans without charging any fees to the client and only accept a .75% fee from the lender for actual services rendered on the loan. This is to stay in compliance with respa. I can't see banks competing with us. But who knows? Maybe the bankers ass. have more pull than NAR and they can get rid of respa, or at least water it down.

It is a clear cut respa violation to contribute anything in value for referral exchange.

There seems to be a popular program where lenders/brokers "employ" agents and have them put in the front end application, thereby allowing the broker to pay the agent for "work" related to loan processing.

Any thoughts?

A Realtor HAS to do five items in addition to filling out the application in order to be compensated by the LO.

http://www.hud.gov/offices/hsg/sfh/res/resp0222.cfm
Section C

In the determination of whether payments from lenders to mortgage brokers are permissible under Section 8 of RESPA, the threshold question is whether there were goods or facilities actually furnished or services actually performed for the total compensation paid to the mortgage broker. In making the determination of whether compensable services are performed, HUDīs letter to the Independent Bankers Association of America, dated February 14, 1995 (IBAA letter) may be useful. In that letter, HUD identified the following services normally performed in the origination of a loan:

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

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

(c) 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.

[...] HUD articulated that it generally would be satisfied that sufficient origination work was performed to justify compensation if it found that:

The lenderīs agent or contractor took the application information (under item (a)); and

The lenderīs agent or contractor performed at least five additional items on the list above.

Thanks AZLender, that was some very helpful information.

AZ lender thats a good list thanks. See the realtors i work with all get a % of the profit from the loan. However they do almost everything on your list. Well to some extent. Obviously while they are training to learn the industry they need some help. I would rather invest my time into training a Realtor who has access to many loans than someone who might like to be in the industry. After 6 months of training and no loans they give up. Realtors usually have a loan in the first couple weeks.

No one seems to discuss agency when they talk about commision income from the loan. If you are the buyers agent whose interest does the yield spread paid in a loan benefit? You or the buyer? Did you disclose , upfront that you are earning yield from the loan and how much this will be? Did you go with a lender who has a program that pays more yield even though the buyer could qualify for better terms and conditions through other lenders? It is not just disclosing your agency relationship. It involves working on behalf of your client and having records of what you agreed to do, then following through that make a legal transaction. Disclose your loan fees upfront and have the buyer initial the disclosure. Disclose again at close that the buyers understand the terms and conditions of this loan and even though better terms and conditions may be available this is acceptable.... and most important, work for your client..not your broker or lender and you should have many satisfied people sending you referrals.

What about the buyers that the loan officer refers to you? Should they expect a cut of your commissions also? Instead of trying to squeeze the loan officer out of his hard earned commission, maybe you should maybe find a new loan officer who will send you back business?