Real Estate Finance
An illegal payment or referral fee given in exchange for directing business, prohibited under RESPA in mortgage transactions.
A kickback in real estate is a payment made to a person for referring business, such as a title company paying a broker for sending clients its way, without providing any actual service in return. RESPA specifically prohibits kickbacks and unearned referral fees in residential mortgage transactions. Violations can result in fines up to $10,000 and up to one year in prison per occurrence. Legitimate service fees for work actually performed are not considered kickbacks.
Exam Tip
RESPA prohibits unearned referral fees. A broker cannot accept payment just for referring a buyer to a lender or title company unless the broker performs actual services.
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Real Estate Finance
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