The Realtor Association of Greater Fort Lauderdale The Realtor Association of Greater Fort LauderdaleThe National REAL ESTATE SETTLEMENT PROCEDURES ACT (RESPA) rules and State rules for "business referals" conflict. The U.S. Department of Housing and Urban Development (HUD) is beefing up its enforcement of RESPA, so it is important that all REALTORS® focus on RESPA and assure that their activities comply with its requirements.
RAGFL is giving clarification to a conflict between RESPA and state language just brought to our attention. Our researchers report Florida Statute 494 and its reference to "referral fees" is in direct conflict with the federal Real Estate Settlement Procedures Act (RESPA). RAGFL is in contact with the Florida Office of Financial Regulation Compliance, the Florida Legislature and the Department of Business and Professional Regulation in effort to resolve the issue.
Current Florida statutes 494 states:
(1) Any person who, for compensation or gain or in the expectation of compensation or gain, refers a borrower to a mortgage brokerage business, mortgage lender or correspondent mortgage lender is deemed to be acting as a mortgage broker requiring licensure pursuant to Chapter 494, Florida Statutes. The referring person shall enter into a written mortgage brokerage business agreement with the borrower as required by Section 494.0038, F.S. If the fee to be paid to the referring person is solely for making the referral, the mortgage brokerage business agreement shall clearly and explicitly state that the fee is being earned solely for making the referral.
(2)(a) A person acting as a mortgage brokerage business shall not assign a written mortgage brokerage business agreement to another person acting as a mortgage brokerage business, mortgage lender acting as a mortgage brokerage business or correspondent mortgage lender acting as a mortgage brokerage business unless the assignment is agreed to in writing by the borrower. The agreement to accept the assignment shall be segregated from other provisions of the written mortgage brokerage business agreement and shall include the name of the assignee. This agreement shall require the signature of the borrower apart from the borrower's original signature for entering into the mortgage brokerage business agreement.
(b) As an alternative to paragraph (2)(a) herein, the borrower may enter into a separate mortgage brokerage business agreement with the successor mortgage brokerage business, mortgage lender or correspondent mortgage lender. The separate mortgage brokerage business agreement shall identify the amount of fees to be earned by each mortgage brokerage business as compensation for acting as a mortgage broker in the mortgage brokerage transaction involved.
Specific Authority 494.0011(2) FS. Law Implemented 494.001(2), 494.0038, 494.0041(2)(b) FS. History-New 1-10-93, Formerly 3D-40.088.
RESPA prohibits referral fees; specifically, RESPA Section 8 states that: "No person shall give and no person shall accept any fee, kickback, or thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or a part of a real estate settlement service involving a federally-related mortgage loan shall be referred to any person."
Per NAR's RESPA Do's and Don't's for Real Estate Brokers and Agents: (attached)
"RESPA prohibits a real estate broker or agent from receiving a "thing of value" for referring business to a settlement service provider (SSP), such as a mortgage banker, mortgage broker, title company or title agent."
More information can be found at the following links.