We are not aware of any prohibitions on paying referral fees related to unsecured consumer loans.

The Real Estate Settlement Procedures Act of 1974 (RESPA) prohibits kickbacks for referrals of real estate settlement services for “federally related mortgage loans,” which are defined as first or subordinate liens on residential real property designed for the occupancy of one to four families, the proceeds of which are used to pay for the property (or pay off an existing loan secured by the property). Consequently, consumer loans not secured by such real estate are not subject to RESPA’s kickback provisions.

However, we recommend obtaining a new loan customer’s authorization before notifying the referring party that they are entitled to a fee, as Regulation P’s privacy requirements generally prohibit your bank from disclosing “the fact that an individual is or has been one of your customers or has obtained a financial product or service from you.” In addition, the Illinois Banking Act and Savings Bank Act each require that a bank or savings bank obtain a customer’s authorization before disclosing their financial records to a third party.

For resources related to our guidance, please see:

• RESPA, 12 USC 2607(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.”)

• RESPA, 12 USC 2602(1) (“the term ‘federally related mortgage loan’ includes any loan (other than temporary financing such as a construction loan) which —

(A) is secured by a first or subordinate lien on residential real property (including individual units of condominiums and cooperatives) designed principally for the occupancy of from one to four families, including any such secured loan, the proceeds of which are used to prepay or pay off an existing loan secured by the same property . . . “)

• Regulation P, 12 CFR 1016.10(a) (“Except as otherwise authorized in this part, you may not, directly or through any affiliate, disclose any nonpublic personal information about a consumer to a nonaffiliated third party unless: . . .”)

• Regulation P, 12 CFR 1016.3(p)(1)(i) (“Nonpublic personal information means . . . Personally identifiable financial information . . . .”)

• Regulation P, 12 CFR 1016.3(q)(2)(i)(C) (“Personally identifiable financial information includes . . . The fact that an individual is or has been one of your customers or has obtained a financial product or service from you . . . .”)

• Illinois Banking Act, 215 ILCS 5/48.1(c) (“Except as otherwise provided by this Act, a bank may not disclose to any person, except to the customer or his duly authorized agent, any financial records or financial information obtained from financial records relating to that customer of that bank unless (1) the customer has authorized disclosure to the person . . .”)

• Savings Bank Act, 205 ILCS 205/4013(d) (“A savings bank may not disclose to any person, except to the member or holder of capital or his duly authorized agent, any financial records relating to that member or shareholder of the savings bank unless: (1) the member or shareholder has authorized disclosure to the person . . .”)