The “Three CardRule” andRESPAFact or Fiction?

Over the years, I have heard that realtors have to give at least 3 cards out to their buyers since this is a RESPA rule. The article below dispels this myth and even goes on to say that violations can occur as easily with one referral as multiple referrals. The article below is written by Kate Hoskins of O’Kelley and Sorohan. “A number of licensed real estate agents have long held to the common belief that referring less than three mortgage lenders to a purchaser of real property is a per se violation of the Real Estate Settlement Procedures Act (“RESPA”), Section (8)(a). In fact, RESPA contains no such exact prohibition or mandate for what has become the common practice of providing three different lender’s business cards to each buyer. As providers of “settlement services” under Section (8) (a),mortgage bankers and brokers, as well as real estate brokers and affiliated licensees, are prohibited from accepting “…any fee, kickback, or thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or part of a real estate settlement service involving a federally related mortgage loan shall be referred to any person.” Therefore, it is the agent’s intent in providing a referral to a lender and the lender’s response to that referral and not the number of referrals that determine the parties’ compliance with RESPA. You can view the whole article on our Realtor Corner.