Academic journal article ABA Banking Journal

Can a Favor Be a Curse? under RESPA, Maybe

Academic journal article ABA Banking Journal

Can a Favor Be a Curse? under RESPA, Maybe

Article excerpt

Q. A local builder has placed a list of preferred construction lenders on one of its web pages. It lists three local banks under the heading "Preferred Construction Loon Banks" and gives the bank names, addresses, and phone numbers--and even a loon originator's name. The builder does state that the viewer can choose their own bank and does not state that any preference is given if the viewer chooses a bank from the list. We did not ask to be on this list. Does being on this list expose us to risks of a kickback violation under the Real Estate Settlement Procedures Act? By being on the list, we do get some free advertising and we also get an indirect referral.

A. Being on this List ,in and of itself, doesn't produce a violation, although it does raise a number of questions that could draw the interest of an examiner. If you can prove that the builder is placing the Link "out of the goodness of its heart," then it appears you would be compliant. …

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