While we are not aware of any regulations that would prevent you from hiring such an employee, both the RESPA kickback rules and Regulation Z’s loan originator compensation rules restrict the compensation that you can pay to the employee.

We believe that a part-time employee who also works as a real estate broker could receive compensation for providing actual settlement services without violating RESPA. Regulation X generally prohibits banks from paying “any fee, kickback or other thing of value” for referring loan business. 12 CFR 1024.14(b). However, there is an exception for “payment to any person of a bona fide salary or compensation or other payment  . . . for services actually performed.” 12 CFR 1024.14(g)(1)(iv). (With that said, we do not believe that the broader exception for “[a]n employer’s payment to its own employees for any referral activities” would apply in this situation, where the employee also owns a separate business and is hired only on a part-time basis. 12 CFR 1024.14(g)(1)(vii).) If you compensate the part-time employee in the same way as you compensate other loan originators, and do not compensate the employee for referring loans to the bank (preventing the employee from “double-dipping”), you should not run afoul of RESPA’s prohibition on kickbacks.

If the bank originates table-funded loans referred by the broker/employee, RESPA’s prohibition on kickbacks still applies — table-funded transactions are not exempt. While RESPA does not apply to “secondary market transactions,” the regulations explicitly state that “[m]ortgage broker transactions that are table-funded are not secondary market transactions” for purposes of that exemption. 12 CFR 1024.5(b)(7). Further, the definition of “table funding” (“a settlement at which a loan is funded by a contemporaneous advance of loan funds and an assignment of the loan to the person advancing the funds”) states that “[a] table-funded transaction is not a secondary market transaction.” 12 CFR 1024.2(b).

Of course, if the employee with be acting as a loan originator, the bank will also have to comply with the loan originator compensation rules in Regulation Z. See 12 CFR 1026.36. Those rules prohibit payments to mortgage loan originators based on the terms or conditions of a mortgage-related credit transaction. 12 CFR 1026.36(d)(1).