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May 2004
Index of all
past
Affiliate Corner columns
Referrals, kickbacks and sleep.
By Tom Gross
Guaranty Residential Lending
How many times have I heard a potential selling agent say he's going to "give me a deal?" How many times have I heard, "If I send a deal your way, what are you going to do for me?"
A recent article by Karen Deis in Loan Officer Magazine highlights schemes, shams and other shady dealings by real estate agents and lenders. Examples of busted schemes in the article, titled "RESPA Cracking Down On Kickbacks and Referral Gifts," range from "sham employees" in an Atlanta brokerage who were paid to fill out applications and real estate agents who filled out on-line applications for a California lender. Title company, mortgage insurance company, builder and attorney examples also made the hit list.
The Real Estate Settlement Procedures Act (RESPA) has been around since 1974, and some people deal with it as if it's just a place to start from rather than adhere to. But the
U. S. Department of Housing and Urban Development (HUD) website makes it pretty clear: "No person shall give and no person shall accept any fee, kickback or thing of value ... incident to or a part of a real estate settlement service involving a federally-related mortgage loan ..." What part of this do we not understand? As the good 'ole boys back home in north Alabama would say, "My momma didn't raise no fool!"
Instead of providing a list of don'ts, why don't we focus on what works? For starters, it would be nice to deal with folks whose yes is yes and whose no is no. It would also be refreshing to experience promises kept rather than broken. Professional relationships at the highest ethical level will always provide the clear vision of integrity.
Certainly, the Aurora Association of
REALTORSŪ Affiliate members I know of work at this high ethical level. They can provide prompt, professional services to get you to the closing table; provide accurate up-front estimates of the cost of their services; keep you and your client informed throughout the purchase process; ensure there are no "surprises" at your closings; and enter into marketing endeavors with you to enhance your success and the AAR affiliate's success.
All of this is dependent on an honest assessment of how we do business - is compensation dependent upon referrals and closings, i.e. how many did you give or receive, or is it built on a mutual desire to succeed in an ethical and forthright manner?
Let's simply conclude with the premise that Affiliate members' focus will be squarely on how we can provide world-class service to our clients with no desire to put our toes on the line of RESPA violations. If we keep that as our paradigm, we'll never have to seek legal council regarding criminal prosecution that could result in up to a $10,000 fine, imprisonment up to one year, and the additional possibility of private litigation for personal settlement of up to three times the charge paid for the service provided. Personally, I'd rather be able to sleep at night, wouldn't you?
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