Has a settlement service provider offered to “sponsor” your continuing education course? Was the course free of charge?
The Real Estate Settlement and Procedures Act (RESPA), regulates federally related mortgage loans on residential real property. RESPA, specifically Section 8(a), prohibits current or futurereferral sources from receiving kickbacks, unearned fees, or “things of value” from settlement service providers.
Question: What is a settlement service?
Answer: A settlement service is any service provided in connection with a real estate settlement for which the buyer or seller will pay. The services include, but are not limited to:
Question: What is considered a “thing of value?”
Answer: A “thing of value” is any payment, advance, funds, loan, service, or other consideration with more than nominal value.
Therefore, if a settlement service provider offers real estate continuing education courses free of charge to a broker, the settlement service provider and the broker who attends the course may be in violation of RESPA. Additionally, if a service provider pays the continuing education course fee for the broker directly to an education provider or reimburses the broker for the course fee, the settlement service provider and the broker are still violating RESPA because the free continuing education course is a “thing of value.”
The Consumer Financial Protection Bureau published a set of frequently asked questions (FAQs) discussing RESPA Section 8 and its application to Marketing Services Agreements, Gifts and Promotional Activities. You can view the FAQs here.