In light of recent volatility with mortgage interest rates, real estate agents should consider best practices for “advertising,” which may include posting rates on social media or portraying themselves as being able to make a loan.

Let’s start with the definition of a “loan originator” in the Dodd-Frank Act. A loan originator is “an organization or person who, for compensation or other monetary gain, performs loan origination activities.”

With respect to these responsibilities, they include “accepting an application, offering credit terms, negotiating credit terms on behalf of a consumer, obtaining an extension of credit for a consumer, or referring a consumer to a donor. order or to a creditor ”. You can read more about the very long and detailed definition here.

However, according to the Consumer Financial Protection Bureau, this does not include a person whoonly carries out real estate brokerage activities and is authorized or registered in accordance with applicable state law, unless that person is indemnified by a creditor or a loan originator or by any agent of this creditor or loan originator for a particular consumer credit transaction covered by this article. “

To provide even clearer guidelines, let’s answer a few common questions.

Regarding the definition of a principal, is it ever acceptable for a real estate agent to advertise interest rates or loan programs?

Only approved loan originators and mortgage brokers, lenders, deposit banks or credit unions should advertise loan programs. The definition of “advertise” includes presenting oneself as being able to make a loan. This includes all forms of advertising, including social media.

What about co-advertising with a lender?

Who pays for the advertising? If the originator of the loan pays part of the co-advertisement, then the real estate agent “directly or indirectly receives compensation from a lender” in exchange for a referral.

Ask the loan originator to provide written confirmation that any co-advertising has been approved by the lender’s compliance and legal department. If the lender doesn’t have legal and compliance advisor, that’s a huge red flag, and I don’t know why you’re referring consumers to this business.

If the loan originator is unwilling to provide such written assurance, real estate agents must accept the risk of increased liability that the co-advertising may violate the anti-bribery provisions of RESPA, Section 8.

Realtors should always hire their own lawyer for legal advice when entering into a co-marketing agreement. Don’t want to pay for a lawyer now? Then plan to pay a lawyer later: take a look at the Consumer Financial Protection Bureau 2015 RESPA Compliance and Marketing Services Agreements.

In the cases below, the real estate agents were paid directly or indirectly by the lender:

What if I have been a principal a long time ago and know the answers to the questions my buyers have?

Real estate agents have a serious duty to provide clients with accurate and up-to-date information. Are you currently an approved principal? If not, refer questions that require a lender license to someone who has an active license and who is employed by a mortgage broker, lender, deposit bank, or credit union.

I know you are trying to be helpful and demonstrate your knowledge, but mortgage laws change frequently.

If you are still not convinced that real estate agents should stop advertising loan programs and quoting mortgage rates and fees, consider these examples of loan originators advertising real estate commissions:

  • “Did you know that real estate commissions are at historically low levels? Contact me, the originator of the loan, for a referral to a real estate agent with the lowest possible commission. “
  • “Contact me, the originator of the loan, for an analysis on how the commission of your realtor is hidden in the sale price and therefore, the price of the house.”
  • “I, the originator of the loan, will help you understand how to negotiate the payment of a lower real estate commission so that you don’t have to pay it every month, in the form of a slightly higher sale price which results in a slightly higher payment over the life of the loan. Look at these spreadsheets and charts. “

The originators of the loans are the originators of the loans. Real estate agents sell houses. Good limits are necessary every day and especially in these unstable times.

You can check the status of a lender license with the National mortgage licensing system.

Jillayne Schlicke is the CEO of CE Forward, Inc., which provides consulting services in a variety of areas including compliance, mortgage law, mortgage fraud, ethics and communications.

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