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(a) Section 8 violation.
Any violation of this section is a violation of section 8 of RESPA (12
U.S.C. 2607) and is subject to enforcement as such under Sec. 3500.19.
(b) No referral fees. No person shall give and no person shall
accept any fee, kickback or other thing of value pursuant to any
agreement or understanding, oral or otherwise, that business incident
to or part of a settlement service involving a federally related
mortgage loan shall be referred to any person. Any referral of a
settlement service is not a compensable service, except as set forth
in Sec. 3500.14(g)(1). A business entity (whether or not in an
affiliate relationship) may not pay any other business entity or the
employees of any other business entity for the referral of settlement
service business.
(c) No split of charges except for actual services performed.
No person shall give and no person shall accept any portion, split, or
percentage of any charge made or received for the rendering of a
settlement service in connection with a transaction involving a
federally related mortgage loan other than for services actually
performed. A charge by a person for which no or nominal services are
performed or for which duplicative fees are charged is an unearned fee
and violates this section. The source of the payment does not
determine whether or not a service is compensable. Nor may the
prohibitions of this part be avoided by creating an arrangement
wherein the purchaser of services splits the fee.
(d) Thing of value. This term is broadly defined in section
3(2) of RESPA (12 U.S.C. 2602(2)). It includes, without limitation,
monies, things, discounts, salaries, commissions, fees, duplicate
payments of a charge, stock, dividends, distributions of partnership
profits, franchise royalties, credits representing monies that may be
paid at a future date, the opportunity to participate in a
money-making program, retained or increased earnings, increased equity
in a parent or subsidiary entity, special bank deposits or accounts,
special or unusual banking terms, services of all types at special or
free rates, sales or rentals at special prices or rates, lease or
rental payments based in whole or in part on the amount of business
referred, trips and payment of another person's expenses, or reduction
in credit against an existing obligation. The term ``payment'' is used
throughout Secs. 3500.14 and 3500.15 as synonymous with the giving or
receiving any ``thing of value'' and does not require transfer of
money.
(e) Agreement or understanding. An agreement or understanding
for the referral of business incident to or part of a settlement
service need not be written or verbalized but may be established by a
practice, pattern or course of conduct. When a thing of value is
received repeatedly and is connected in any way with the volume or
value of the business referred, the receipt of the thing of value is
evidence that it is made pursuant to an agreement or understanding for
the referral of business.
(f) Referral.
(1) A referral includes any oral or written action directed to a
person which has the effect of affirmatively influencing the selection
by any person of a provider of a settlement service or business
incident to or part of a settlement service when such person will pay
for such settlement service or business incident thereto or pay a
charge attributable in whole or in part to such settlement service or
business.
(2) A referral also occurs whenever a person paying for a
settlement service or business incident thereto is required to use
(see Sec. 3500.2, ``required use'') a particular provider of a
settlement service or business incident thereto.
(g) Exemptions for fees, salaries, compensation, or other payments.
(1) The following are permissible:
(i) A payment to an attorney at law for services actually
rendered;
(ii) A payment by a title company to its duly appointed agent
for services actually performed in the issuance of a policy of title
insurance;
(iii) A payment by a lender to its duly appointed agent or
contractor for services actually performed in the origination,
processing, or funding of a loan;
(iv) A payment to any person of a bona fide salary or
compensation or other payment for goods or facilities actually
furnished or for services actually performed;
(v) A payment pursuant to cooperative brokerage and referral
arrangements or agreements between real estate agents and real estate
brokers. (The statutory exemption restated in this paragraph refers
only to fee divisions within real estate brokerage arrangements when
all parties are acting in a real estate brokerage capacity, and has no
applicability to any fee arrangements between real estate brokers and
mortgage brokers or between mortgage brokers.)
(vi) Normal promotional and educational activities that are not
conditioned on the referral of business and do not involve the
defraying of expenses that otherwise would be incurred by persons in a
position to refer settlement services or business incident thereto;
(vii) A payment by an employer to its own bona fide employee for
generating business for that employer;
(viii) In a controlled business arrangement, a payment by an
employer of a bonus to a managerial employee based on criteria
relating to performance (such as profitability, capture rate, or other
thresholds) of a business entity in the controlled business
arrangement. However, the amount of such bonus may not be calculated
as a multiple of the number or value of referrals of settlement
service business to a business entity in a controlled business
arrangement; and
(ix)(A) A payment by an employer to its bona fide employee for
the referral of settlement service business to a settlement service
provider that has an affiliate relationship with the employer or in
which the employer has a direct or beneficial ownership interest of
more than 1 percent, if the following conditions are met:
(1) The employee does not perform settlement services in any
transaction; and
(2) Before the referral, the employee provides to the person
being referred a written disclosure in the format of the Controlled
Business Arrangement Disclosure Statement, set forth in appendix D to
this part.
(B) For purposes of this paragraph (g)(1)(ix), the marketing of
a settlement service or product of an affiliated entity, including the
collection and conveyance of information or the taking of an
application or order for an affiliated entity, does not constitute the
performance of a settlement service. Under this paragraph (g)(1)(ix),
marketing of a settlement service or product may include incidental
communications with the consumer after the application or order, such
as providing the consumer with information about the status of an
application or order; marketing shall not include serving as the
ongoing point of contact for coordinating the delivery and provision
of settlement services.
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