We are not aware of any law or regulation that would prohibit a bank employee from also working as a real estate broker in her free time, provided that she does not receive any compensation for referring her clients to the bank.

In this situation, RESPA’s prohibition on referral compensation would be inapplicable, as the loans are business-purpose loans, and no compensation is changing hands. But as an additional safeguard, your bank may wish to consider assigning any loans that are made to this employee’s real estate brokerage clients to a different loan processor at the bank. We also recommend that you check your bank’s ethics policy and code of conduct, although it seems unlikely this situation would raise any issues with them since no compensation is changing hands.

Please note that we are not qualified to provide guidance on potential ethics issues for the employee arising under their broker-related requirements, such as real estate broker licensing laws, the National Association of Realtors Code of Ethics and Standards of Practice (if applicable), and the employee’s managing broker’s internal policies.

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.”)

• Regulation X, 12 CFR 1024.5(b)(2) (“Exemptions. . . . (2) An extension of credit primarily for business, commercial, or agricultural purpose . . . .”)