Anything of value, regardless of the amount, that is given for a referral of business, would be considered a violation of Section 8. Unfortunately, the CFPB has not provided clarification on these types of “gifts,” so we have to rely on what the regulation says.
RESPA does allow for “normal promotional or educational activity”; however, to meet that criteria, two conditions must be met:
- The activities are not conditioned on the referral of business; and
- The activities do not involve defraying expenses that otherwise would be incurred by the referral source.
Ultimately, the decision lies with Bank Management and should be considered based on the financial institution’s risk appetite and the individual, unique facts surrounding the request. Some things to consider are, what is the relationship between the MLO and the person/company receiving the gift? Are all the MLO’s realtors/builders receiving the gift or is it just certain ones? Before entering any type of “gift giving” scenario, TCA recommends the bank speak with their legal counsel regarding giving anything of value to individuals or companies that MLO’s have business relationships.
You can also find some Q&A’s on this topic from the CFPB at this link.