On my mind: Manna from mortgage lenders

(Flickr photo by e-wander

Perhaps you saw my post earlier this year about lunches meant to lure brokers to open houses meant for the industry.

They work!

But only about half the time does the listing broker holding the open house pay for those sandwiches, pasta or fruit salads, even sushi.

Often, it’s a mortgage lender who shoulders the expense, hoping to curry the listing agent’s favor and to introduce himself or herself to brokers. We are, after all, in a position to refer business to lenders.

I got to thinking about the practice after coming across a pretty dense Realty Times article and a fairly technical post by Connecticut broker Maria Gilda Racelis about the Real Estate Settlement and Procedures Act (RESPA), which states:

No person shall give and no person shall accept any portion, split, or percentage of any charge made or received for the rendering of a real estate settlement service in connection with a transaction involving a federally related mortgage loan other than for services actually performed.

To oversimplify, RESPA forbids kickbacks — that is, anything we in the business might receive in return for referring someone to a lender. It’s a consumer protection.

Let’s assume for a moment that we’re all above receiving kickbacks.

Let’s also then wonder about those benefits some of us — yes, including me — receive from lenders whether they pick up the tab for a lunch or dinner with us or help us sell a property by providing comestibles for other brokers.

Certainly the contribution is manifest, so it’s hard to condemn without putting an unusually fine point on RESPA. And it’s not for business already received as opposed to anticipated.

But I wonder whether accepting the gift doesn’t put us brokers in at least a compromising position.

Discuss!

Tomorrow: Weekly Roundup

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Malcolm Carter

Licensed Associate Real Estate Broker

Senior Vice President

Charles Rutenberg Realty

127 E. 56th Street

New York, NY 10022

M: 347-886-0248

F: 347-438-3201

Malcolm@ServiceYouCanTrust.com

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