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Another RESPA Viewpoint

MAY 21, 2014 10:34am ET
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I love getting feedback on my posts and wanted to share this one with y'all. Because I love you. I really, really do.

Ms. Sawyer:

I just read the gift card article and would like to present a slightly different perspective – directly from RESPA's Regulation X:

§1024.14 Prohibition against kickbacks and unearned fees.

(g) Fees, salaries, compensation, or other payments. (1) Section 8 of RESPA permits:

(vi) Normal promotional and educational activities that are not conditioned on the referral of business and that 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

The idea of offering a gift card as either a thank you, for example by a real estate agent or mortgage originator, for helping with a particular transaction after the fact and even normal promotional activities such as offering gift cards or chances to win gift cards do not directly violate the referenced RESPA section. While there may be local statutes or rules regarding "chance-based" advertising, the simple idea of exchanging a gift card for other, non-referral based consideration strikes me as falling well within 14(g)'s idea of "normal promotional."

As a business practice, I think linking a review to consideration diminishes the value of the review, but that is beyond the scope of the question at hand.

Regards,

Bill Kidwell

President, IMMAAG;www.immaag.com

2007 President, Colorado Association of Mortgage Brokers

I am not now, nor will I ever be, the RESPA police; but I do agree with Bill's interpretation above.

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