One of our customers is a realtor, and we would like him to include a link on his website to our bank’s website so that his customers can apply for consumer mortgage loans with us. We are not paying the realtor for the link, nor are we paying the realtor if one of his customers applies for or obtains a loan with us, the link would not be accompanied by any promotional language, and no other banks would be listed on his website. Is this permissible under RESPA’s anti-kickback provisions?

Yes, we believe that a realtor providing a link to your bank’s website with the facts described above would be permissible under the Real Estate Settlement Procedures Act (RESPA), with some caveats as noted below.

RESPA’s anti-kickback provisions prohibit financial institutions from accepting or offering any “thing of value” from a realtor or other settlement service provider in exchange for a referral. A “thing of value” is broadly defined to include money, discounts, and fees, as well as “special bank deposits or accounts, special or unusual banking terms,” and more.

While a link to your bank on the realtor’s webpage would be a “thing of value,” as it likely would drive more web traffic and perhaps more business to your bank, provided there is no understanding that your bank will be referring business to the realtor, there is no “thing of value” exchanged for a referral. Separately, it is important to note that this conclusion can be reached only if your bank is not paying for the link and it is not providing any special bank services or unusual banking terms to the realtor.

We are aware that there are other sources on the internet that draw a different conclusion; however, we do not believe their reasoning tracks the actual language of the RESPA. We do recommend closely monitoring this arrangement to ensure that there is no indication of an understanding that your bank will be steering business to the realtor, or that your bank will be compensating or providing special treatment to the realtor.

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 1024.14(b) (“No person shall give and no person shall accept any fee, kickback or other thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or part of a settlement service involving a federally related mortgage loan shall be referred to any person . . . A company may not pay any other company or the employees of any other company for the referral of settlement service business.”)

Regulation X, 12 CFR 1024.14(d) (“Thing of value. This term is broadly defined in section 3(2) of RESPA (12 U.S.C. 2602(2)). It includes, without limitation, monies, things, discounts, salaries, commissions, fees, duplicate payments of a charge, stock, dividends, distributions of partnership profits, franchise royalties, credits representing monies that may be paid at a future date, the opportunity to participate in a money-making program, retained or increased earnings, increased equity in a parent or subsidiary entity, special bank deposits or accounts, special or unusual banking terms, services of all types at special or free rates, sales or rentals at special prices or rates, lease or rental payments based in whole or in part on the amount of business referred, trips and payment of another person’s expenses, or reduction in credit against an existing obligation. The term ‘payment’ is used throughout §§ 1024.14 and 1024.15 as synonymous with the giving or receiving of any ‘thing of value’ and does not require transfer of money.”)

CFPB Press Release, CFPB Orders Prospect Mortgage to Pay $3.5 Million Fine for Illegal Kickback Scheme (January 31, 2017) (“Brokers or agents often make recommendations to their clients for various services, such as mortgage lending, title insurance, or home inspectors. Among other things, the Real Estate Settlement Procedures Act prohibits brokers and agents from exploiting consumers’ reliance on these recommendations by accepting payments or kickbacks in return for referrals to particular service providers.”)

CFPB Press Release, CFPB Orders Prospect Mortgage to Pay $3.5 Million Fine for Illegal Kickback Scheme (January 31, 2017) (“Specifically, the CFPB found that Prospect Mortgage: Paid for referrals through agreements: Prospect maintained various agreements with over 100 real estate brokers, including ReMax Gold Coast and Keller Williams Mid-Willamette, which served primarily as vehicles to deliver payments for referrals of mortgage business. Prospect tracked the number of referrals made by each broker and adjusted the amounts paid accordingly. Prospect also had other, more informal, co-marketing arrangements that operated as vehicles to make payments for referrals.”)