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RESPA COMPLIANT DOCUMENT

Mortgage Broker Fees

The relevant prohibitions in Section 8 read as follows:

"(a) No person shall give and no person shall accept any fee, kickback, or thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or a part of a real estate settlement service involving a federally related mortgage loan shall be referred to any person.

"(b) 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." 12 USC 2607(a) and (b).

In determining whether payments are for referrals or for services actually performed, HUD has identified the following services normally performed in the origination of a loan:

a)       taking information from the borrower and filling out the application;

b)       analyzing the prospective borrower's income and debt and pre-qualifying the prospective borrower to determine the maximum mortgage that the prospective borrower can afford;

c)       educating the prospective borrower in the home-buying and -financing process, advising the borrower about the different types of loan products available, and demonstrating how closing costs and monthly payments could vary under each product;

d)       collecting financial information (tax returns, bank statements) and other related documents that are part of the application process;

e)       initiating/ordering VOEs (verifications of employment) and VODs (verifications of deposit);

f)         initiating/ordering requests for mortgage and other loan verifications;

g)       initiating/ordering appraisals;

h)       initiating/ordering inspections or engineering reports;

i)         providing disclosures (truth in lending, good faith estimate, others) to the borrower;

j)         assisting the borrower in understanding and clearing credit problems;

k)       maintaining regular contact with the borrower, realtors, lender, between application and closing to appraise them of the status of the application and gather any additional information as needed;

l)         ordering legal documents;

m)     determining whether the property was located in a flood zone or ordering such service; and

n)       participating in the loan closing."

HUD Statement of Policy 1999-1, Section C. HUD has stated that it would be satisfied that sufficient origination work had been performed to justify a fee if the agent or contractor took the application information (a., above) and performed at least five additional items from the above list. HUD Statement of Policy 1999-1, Section C.