I am starting a new business. It is a website for mortgage originators and real estate agents to use to escort their borrowers through the origination process. It is a real learning process that accomplishes the RESPA requirement of covering the 14 items (shown below) needed to originate a loan. BrokerVine is a Computerized Loan Origination system. Therefore, It is a settlement service provider because we provide services related to the origination of mortgages. Our fee will be paid by the borrower on closing. We provide leads to real estate agents to replace the people they voluntarily introduce to the mortgage originators. The originator and/or the agent will escort the customer through our website discussing their home value and available products and pricing and several other things. The plan is to pay the mortgage originator a commission for the work he will do for the CLO. There is no payment for referral of leads to real estate agents and no kickbacks for work not done. They are not paid from the closing transaction. The mortgage originator’s fee is paid directly to his Mortgage Company, and then divided according to their pay agreement. That way it is clear that the mortgage originator is an employee of the Mortgage Company. My question is: since the mortgage originator and the real estate agent (who gets new leads) are doing constructive work for the CLO, is it ok, according to RESPA, to pay a bonus to each party for using our product and doing the work required? The real estate agent will be linked to more than one mortgage originator so that it is not an exclusive arrangement. This is an idea that I want to structure properly, I’m flexible and anxious to get something going soon.
Research:
Section 8(b) prohibits the giving or acceptance of "any portion, split or percentage of any charge made or received for the rendering of a real estate settlement service …other than for services actually performed." By regulation, HUD has established that the prohibitions include a charge for which "no or nominal services are performed." 24 C.F.R. § 3500.14(c).
The 14 tasks:
1.Take information from the borrower and fill out the application.
2.Analyze income and debt to determine the maximum mortgage the borrower can afford.
3.Educate the borrower about the home buying process, advise them about different types of loan products available and demonstrate how closing costs and monthly payments would vary under each product.
4.Collect financial information and other related documents that are part of the application process (tax returns, bank statements, etc.).
5.Initiate and order verification of employment and deposits.
6 Initiate and order requests for mortgage and other loan verifications.
7.Initiate and order appraisals.
8.Initiate and order inspections or engineering reports.
9.Provide disclosures to the borrower (truth-in-lending, good faith estimate, etc.).
10.Assist the borrower in understanding and clearing credit problems.
11.Maintain regular contact with the borrower, realtors, and lender between application and closing to apprise them of the status of the application and to gather any additional information as needed.
12.Order legal documents.
13.Determine if the property is in a flood zone.
14.Participate in the loan closing.
Just in case, here is an outline explaining The Lead Partners by BrokerVine:
1.The RE agent works with a prospect on at least half of the 14 tasks mentioned in RESPA, and shown above.
2.RE agent introduces the lead to one of several mortgage originators that are participating. The RE Agent gets 2 new leads from BrokerVine to work on. No cost is involved.
3 The mortgage originator pays BrokerVine for the prospect.
4 The 14 tasks in RESPA are covered by the mortgage originator with the help of the BrokerVine website
5. BrokerVine charges a Computerized Loan Origination fee on closing and pays most of it to the mortgage originator to reimburse them for the work done on the loan on behalf of the CLO.
This is structured this way to comply with RESPA and build a business that really helps to get loans done efficiently – The real estate agent is helping the mortgage originator. The mortgage originator is helping the real estate agent. The CLO is helping the agent and the originator show the prospect which mortgage solution is best. It is a good partnership.
Thank you for your help
Skip Raleigh
636-561-0416