Alert August 26, 2008

HUD Issues RESPA FAQs on Real Estate Agent Compensation

In response to questions asked by the National Association of Realtors, HUD issued FAQs regarding real estate agent compensation under the Real Estate Settlement Procedures Act. The FAQs suggest that (1) real estate agents cannot be compensated as loan originators if they do not provide loan origination services or provide only nominal loan origination services, such as merely taking an application, (2) lenders may compensate real estate agents who are bona fide employees of the lender for referral activities, (3) whether an employee is “bona fide” is determined by the actual work performed, particularly whether the work is “actual, necessary, and distinct” from the services the employee provides in another capacity, (4) a real estate agent affiliated with a lender must comply with RESPA regardless of whether the real estate brokerage is affiliated with the lender, and (5) accelerated payment of compensation and charitable donations in exchange for referrals are “things of value” under RESPA. Click here for the FAQs.