- [Brian] All right, hey everybody, welcome to RESPA: Co-Marketing and Illegal Kickbacks. Can't be doing any of that kind of stuff. These are crazy days. I think we've all seen, you know, two years ago you couldn't find a damn house out there. The inventory was gone. And now, December, 2022, rates are up, loan volume is way down for purchases, refinances are a dumpster fire. And what does that do? That leads to a lot of panic and bad decision by loan officers in the industry. So we're gonna talk about that today. If you are counsel and you're new to the industry, you gotta know RESPA marketing and kickbacks. And if you've been around for a while, you know what I'm talking about. So my name is Brian Brunkow. I'm a Seattle-based, California and Washington attorney. I also have a real estate license for California and Washington that's current but inactive. I don't use it. Certainly would not use it in California. Everyone's kinda moving out these days, right? But I do have a license there. My background, I've really spent most of my background as an attorney working in-house at mortgage lenders, both pre-CFPB back in 2011, CFPB came around. So I've seen the industry pre-CFPB in the wild, wild west, and also post-CFPB. And the market is always changing. So you gotta keep on your toes. So I've been in-house. I've worked as a paralegal. I've worked as in-house counsel, outside counsel, executive level chief compliance officer, and I've done a lot of corporate and staff training for these lenders. I've been involved with a company where they went through a CFPB full civil investigation for false and fraudulent advertising. Please know, that happened before I got there. That was why they brought me on board. But that's not something you want to go through. And so you gotta take this stuff seriously. If you do get called out by a state or federal agency, it's not like you raise your hand and say, "We learned our lesson, let's move on." You're not done, like the IRS, you're not done until they say you're done. So you don't wanna get caught up in that. So good preventative measures is what we wanna do. So I've been involved with that. I've worked on policies and procedures, consumer complaints in the hundreds. And again, a ton of staff training. And then a lot of Q&A from staff and processors and loan officers and executives on the state and federal regulations. So it keeps you busy. It's, you know, it's one of those departments, we're not bringing in a penny to the company. So we gotta prove our worth by trying to help the client stay outta trouble. It's not a popular position a lot of times because, you know, with real estate, it's high stakes. You're talking about a half million dollar loan, a million dollar loan, they want to close that loan. It's a zero sum game, right? But our job is to help protect the company, protect the staff, and also ethically we want to help protect consumers as well from bad behavior that might be taking place inside the shop. So, three keys for today. First, marketing, when we're talking about RESPA and co-marketing and kickbacks, the two things you're gonna repeat over and over again in training, in policies and procedures, anytime these new schemes come up between loan officers and real estate agents is, is everybody paying their fair share? And is everybody paying fair market value? That's kind of the safe harbor-ish approach to the industry. Pay your fair share, nothing less, nothing more, and then make sure you're paying fair market value. You follow those two guidelines and you're seriously 80% there when it comes to RESPA and marketing and kickbacks. Second, sales is a zero sum game, right? You either get the sale, you get the commission, or you don't. Now, here's where it gets complicated. If you work in sales for an ice cream shop, you lose that ice cream sale to the competitor down the street, who cares? It's low stakes and somebody's gonna show up next week to pass you over to get that delicious ice cream cone with all the sprinkles. With real estate mortgages, it's gonna be different, right? Because you get a home loan, you purchase a loan maybe three to five times in your lifetime, and then you might do some refinances as well. But it's not like working down at the ice cream shop. You're gonna get that customer today, and if you miss it, maybe they come back 18 months for a refi, maybe they come back 18 years down the road for a new purchase. So the stakes are much higher and it's much more rare. So what happens between the ice cream shop and the mortgage shop, a lot of bad behavior on the mortgage side, just because the stakes are higher and the deals are much less common. So the third thing to keep in mind for today, if you get into the industry, when you're evaluating bad acts within the company, it does happen. That's our job, is to protect the company, protect staff, look out for the consumers. But bad stuff does happen. And when bad stuff happens, you want to evaluate it through a three-part test. The three kind of prongs that I always go over when things come up, which they will, is first, is the bad act, the alleged bad act, is it a case of misfeasance, a mistake, or is it malfeasance, intentional? Second, is the bad act ancient history or is it recent? And then third, you wanna look at is this bad act a one-off or is it a pattern? So obviously as attorneys, we know, whatever industry you're in, if it is malfeasance, intentional, if it is recent behavior, and it's a pattern of bad acts, that's something you gotta take seriously because the agencies are gonna hammer you. And if the agencies don't hammer you, you can be pretty much guaranteed your competition is gonna hear about it, that you're paying kickbacks, you're defraying real estate agents' expenses. And that's gonna get you in a lot of trouble. So it could be competition, could be a whistleblower complaint, could be an agency, but rest assured, it's gonna come to light at some point. So here's our roadmap for today. We are looking at RESPA 8. When you hear RESPA 8, you're talking about co-marketing. That's just kind of the phrasing that we use within the industry. So we're gonna do a little intro. We'll look at an overview of what the rule allows, what kind of payments that you can make under RESPA. Then we'll dive into RESPA violations. And again, we're looking at kickbacks, you know, paying for somebody's expenses, paying kickbacks for a referral. Can't be doing that kind of stuff. So, you know, providing value for referrals, can't do that. Defraying expenses, can't do that. Pay your fair share, pay fair market. And I'm gonna say that over and over again. I would recommend everyone gets this tattooed on their shoulder at the end of today's presentation, just to keep it top of mind. Then we'll dive into marketing service agreements. These are allowed, but heavily disfavored by the agencies. They don't like 'em. You can do 'em. And again, in a market like this, where rates are around 6-7%, purchase volume is bad, refis are just dead. Lenders get creative and they use MSAs. It's allowed. But expect that during exams, they're gonna hammer you on this. And you're gonna have to have all your docs ready to explain what you're doing, how the fees are set up, how the services are set up. You can do it, but just know that you're gonna be tested on it at exam time. And then we'll finish up with some RESPA best practices. I'll hop up on my little soapbox here and provide some ideas on how to protect yourself as an attorney, how to protect the company, which is our client, how to protect staff if they're brand new to the industry. You just, you gotta look out for staff. If you have some bad apples in the company, they can lead new staff to the industry down the wrong path and get them in trouble. And then also, again, ethically, we always want to be looking out for the consumers. They don't know any of this stuff, it's confusing. They go through a purchase three to five times in a lifetime. We gotta be looking out for them just ethically, and as, you know, as good attorneys. So here's our hypothetical for today. We are in-house counsel for the lender. And we have loan officers who have marketing programs and educational programs set up with their industry partners, quote-unquote, which are real estate agents. And they might have some marketing programs geared towards consumers as well. And we're doing this from the POV of the lender side, 'cause typically in the industry, loan officers are chasing the realtors, not the other way around. Loan officers are out there making bad decisions, bad promises, and just doing things right in the gray area, maybe they're crossing the line. But the leverage is with the realtors. The loan officers are chasing down the realtors to do co-marketing programs. So kind of our hypothetical today, we're in-house counsel. It's our first day in the job at a lender. And when we're talking about RESPA and co-marketing and kickbacks, we're thinking about that first time home buyer. They're looking for a primary residence, could be a single family home, could be a condo. They're looking at getting a purchase or a refinance and they're thinking about a conventional FHA or VA loan. So just sort of that vanilla home loan, primary resident. Let's not get too complicated or too out in the weeds on what rules apply to what loans. We're just thinking of that vanilla first time home buyer buying a home to live in and they're gonna commute to work. RESPA does not apply to loans primarily for business, commercial or agricultural purposes. So again, we're thinking about that home loan that they're gonna live in as a primary residence. That's kind of our hypothetical for today. So what are the agencies focused on? You might have heard this already, you might have heard this five minutes ago. Did the loan officer and the realtor pay their fair share? No more, no less. Did they pay for their fair share? Did the LO and the realtor pay or receive fair market value? No more, no less. Is the event, it could be a lunch and learn, it could be a co-marketing program, it could be a booze cruise, is event X, fill in the blank, a disguised quid pro quo? In the industry, again, our POV for today, we are in-house counsel for a lender. And we know that the realtors have the leverage. So our loan officers, our employees, are out there making creative decisions, creative programs, that could get themselves and the company and you as the attorney in trouble if you are not training and trying to prevent that kind of stuff. So the question is, is it a disguised quid pro quo? And that means is somebody providing value for a referral? And value does not mean a $500 gift card. There's no de minimis limit. It could be a $5 gift card for Starbucks. If a loan officer is providing a $5 gift card to their favorite realtor with the hope that the realtor sends them business down the road, that is a violation of RESPA, because that $5 gift card, that adds up. It's a $5 gift card this week, and next week, and the week after that. After a year, that's, you know, 260 bucks worth of Starbucks coffee. That's a lot of caffeine. You can't be providing value for a referral. And we'll talk about that over and over again today, 'cause it just comes up all the time. And staff kind of, well, they may forget the training every once in a while, so you repeat it, get the reps in, so they can keep themselves outta trouble. I don't know where you work. If you get a suspended license as a loan officer, you are gonna have a tough time outside of looking for employment with friends and family if you have a banged up license for kickbacks, which is about as bad as it gets. So agency focus right now, you know, they used to really hammer the Wells Fargos and the Bank of Americas and the Chase-slash-Washington Mutuals of the world. But that's not really where we're at today. It takes these big banks, these big aircraft carriers, too much time to get a home loan done. So in May of 2022, roughly 75%+ of all home loans were being done by direct lenders. So that means kind of the, you know, the Guilds, the, you know, the small direct lenders that are not big depository banks. You know, 75%+ are being done by non-depository lenders, which means these smaller companies, you know, 200 employees, a thousand employees, they are really a focus of both state and federal agencies because that is where consumers are going to get their home loans. They're not going to credit unions 'cause it takes too long. And they're really not going to depository banks unless they have a really good reason to do that. So if you work for a direct lender, you are in the crosshairs. Don't think you're safe because you have less than a hundred employees. That's the kind of company that agencies are gonna look at 'cause they want to keep consumers safe. And also they always wanna send a message out there, if they go after the company with less than a hundred employees, that tells everybody else that they are on the hook as well. Second kind of thing to keep in mind is the CFPB recently announced that they need help on enforcement. And the CFPB sent out a press release that said, states, you are good to go with helping us out on enforcing some of these federal protection laws. Step in, we're not gonna have a problem with that. So the states, they can go solo if they see stuff going wrong with RESPA violations, you know, paying value for referrals, defraying expenses. The states can go solo, or the states can also jump in and join with the CFPB. What we don't want to have happen is the states, you know, going after the same claim as the CFPB. So, lender allegedly does something wrong. CFPB is investigating issue A, B, C. That means the states can jump in and join the CFPB on issues A, B, C, and the states can come after the company for issue D, E, F, G, H and on it goes. So the CFPB is encouraging the states to get out there and get after some of these bad apples. And I'll tell you what, you know, I'm on the lender side, but there are still some bad actors in the industry. Until the agencies start kicking bad staff out of the industry, this kind of stuff is gonna continue. And we wanna get rid of those bad actors because they give the industry a bad reputation, which leads to more enforcement of the people who are trying to do things right. Again, kind of misfeasance, okay, make mistakes all day long, we can get that corrected. But malfeasance, we wanna get rid of those employees and get rid of those lenders as quickly as we can. And it comes down to cheaters and line cutters. We don't like malfeasance, we don't like cheaters, we don't like line cutters. Instinctively, we want to kind of hammer those companies and those employees. So let's jump into RESPA Introduction. This is RESPA's long and winding road. It shouldn't come as any surprise to any companies out there that this stuff is on the books. RESPAs have been around since the 1970s. And it first was written up in 1974. Went into effect under the Housing and Urban Development, effective in 1975. Stayed over there for a while. Then we had the Great Recession of 2008. Remember the bubble? Bunch of really horrible loans that went out there. And it wasn't just the lenders at fault. It was the lender's greed, it was the consumer's greed. It was Wall Street packaging up crap stuff and selling it. And it was a lack of regulatory oversight by the state and federal agencies. They did not do their job. Had they done their job, we would've been able to prevent this earlier on, or at least limited some of the damage. But it was the lenders, it was the consumers, it was Wall Street, and it was also the regulatory agencies. Everybody was at fault. Probably mostly the lenders' fault, but everyone gets to take their blame on this one. So as a result of the Great Recession, they said, we need to fix this and start consolidating agencies and have fewer agencies handling more of these regulatory guidelines, because between the state guidelines and federal guidelines, it's just too much to keep track of, too many federal agencies. So as a result of the Great Recession, we had the Dodd-Frank Act in 2010, consolidated some of the regulations under the CFPB, Consumer Financial Protection Bureau. The CFPB kicked off in 2011. And they are responsible for rule creation, supervision and enforcement, which includes RESPA. So if you work for a big depository, a Bank of America, a small, you know, direct lender, like a Guild, you work for a credit union like Navy Federal, Navy Credit Union, you will be subject to, you know, these regulations that we're talking about today. But again, for us for today, our POV is going to be we work for a direct lender and our loan officers are trying to come up with creative ideas, 'cause they gotta keep their paychecks coming in to pay that lease on the Lexus. All right, so RESPA coverage, what is it, what does RESPA cover? It covers not only marketing, illegal kickbacks and referral fees, but also RESPA covers a wide spectrum of different things that come up in the settlement, such as loan disclosures, the type of fees, and accurately disclosing the costs. They don't tell you what you can charge, they just say, disclose it correctly. It's gonna cover title insurance, escrow accounts, loan origination and loan servicing. Loan servicing gets passed around quite a bit. And the majority of the consumer complaints that come up, if you're working in-house counsel, or as a compliance officer, your loan servicing is gonna get hit all the time. You gotta get used to that. But for our coverage today, again, we're focusing on the RESPA 8 section, which is illegal kickbacks and referral fees. Don't provide value for a referral. And pay fair market value. All right, so the current market, where are we at today? You know, things are changing all the time, right? I mean we, we get used to a buyer's market, and it swings into a seller's market, and it swings back and forth. So two years ago you couldn't find a house. Everything was getting snatched up with cash. Now heading into 2023, interest rates up, purchase volume down, refinances non-existent. That's the market that the loan officers who depend on that commission check, that's kind of the industry that we're dealing with. That's gonna lead to a lot of bad behavior. And if you are working in headquarters in Seattle and you have branches down in Florida and Massachusetts and New York and Texas, it's hard to keep track of all the branches going on. You don't have that personal, you know, connection on a day in, day out basis at the water cooler. You gotta keep track of what the branches are doing. Trust me on that. So where are we at right now? This is leading to lenders and loan officers, you know, history kind of repeats itself, we've got this market where you cannot fund a loan, which means they're scrambling, right? The lenders, they have to pay those fixed expenses, they get, whether you close a loan or not, they still gotta pay for the rent on the building. They gotta heat up the jacuzzi in the back of the building for the employees, and keep the ping-pong table in good shape, keep the video games plugged in with all that electricity. But they have fixed expenses. You can't get rid of those. So whether you close loans or not, they gotta pay those expenses. Loan officer, they got student loans to pay, mortgage to pay, and they're scrambling, which means they might be offering consumers, let's call 'em incentives, to send referrals to them. They can't do that. You can't provide value to a consumer to send a referral your way, that's a violation. They might be doing it with industry partners. They're paying for their co-marketing. They are buying gifts for the real estate agent. They are paying for gifts on behalf of the real estate agent and sending that to the consumer. That's the kind of stuff you cannot do, because why? You gotta pay your fair share. And you gotta pay fair market value. And this can lead to civil and criminal acts. Believe it or not, you can get sent to jail for RESPA kickbacks. It's malfeasance, it's illegal. You can get sent to jail for up to one year, and you can get fined up to $10,000 per violation. So if you have a one-off, it could be up to $10,000. If you have a loan officer and he or she's doing something systemically, day in, day out, that can put you outta business, 'cause up to 10,000 per violation. And if the agencies don't like what they see, and again, your competition's gonna find out about it, guaranteed. Competition finds out, turns you into the agency, agency shows up, and you have a systemic problem with kickbacks, that can get you in a lot of trouble. And I don't know if too many people have actually been sent to jail, but it's gonna be the guy or the girl who's doing something systemically who's gonna be sent to jail for that kind of stuff. License is at risk doing stuff the wrong way. You're not training on it, you're being indifferent, kind of complacent, that puts your client's license at risk as a lender. It is gonna put the loan officer's license at risk. And ultimately it can put your license at risk too as an attorney, because at exam time, investigations, civil complaints, litigation, you are always certifying under penalty of perjury. So don't get worn down by the client. They're gonna push the limits as much as they possibly can, believe me, but don't get sucked into that. You gotta be training. You have to be, you know, providing preventative measures, providing them options, and keeping documentation when they decide to go a different direction with their programs. But you wanna be on record saying, "Don't do this, wouldn't recommend it," because eventually at exam time, at the very least, you'll have to certify to some of the things that happened and did not happen within the company for the particular state that's examining you. So this is what it's about. RESPA, I'm not saying that the RESPA rules make a whole lot of sense. It it doesn't really work that well when you have all these different parties involved with the, you know, loan officer and the real estate agent and all these settlement service providers. The rules, I'm not saying the rules are great, but what I am saying, and what we need to communicate to staff and the execs is that we have a level playing field. RESPA is not fun, but we have a level playing field within the industry. So it's not like we're being treated unfairly by following the rules on RESPA about not paying value for referrals and not defraying real estate agents' expenses. And we gotta keep hammering that home to the company. It's a level field. We don't care if we have a new employee and they say, "Well, this is how he did it at my old shop." Doesn't matter. We know what the rules are, gotta follow 'em. We don't care if the executives say, "Well, this is a tough market, we gotta do what we gotta do. "And we're not really this kind of company. "We really believe in ethics, "but we're gonna do, what we gotta do." No, this, it's a level playing field. The good companies are following the rules the way they should. And we gotta make sure that we can kind of nudge our client along to make good decisions. So let's take a look at the RESPA overview. This is the kind of stuff that is gonna come up with the marketing. You have to keep track and juggle a bunch of different rules and regulations when you're involved in marketing. It's gonna be RESPA 8, co-marketing. It's gonna be UDAAP, Unfair, Deceptive, or Abusive Acts or Practices. It is Fair Lending. Truth in lending, which has to do with the interest rates and the APR, making sure that's accurate. And then also the SAFE Act, the Secure, and I can't, I always mix this one up, but it's for licensing, the loan officer has to be licensed in the state that they're marketing to. And also you gotta make sure that the loan processors, who are not licensed, are not communicating to consumers that they can take a loan application or negotiate loan terms. So this is the kind of stuff you have to juggle. It's licensing. It's Unfair, Deceptive, or Abusive Acts or Practices. fair Lending. Truth in lending. And RESPA. All this stuff is going along at the same time. And the agencies expect you to know this stuff when they come out for the exam or the investigation. So these are the sections of RESPA. Section 8 covers kickbacks for referral, for business referrals, can't be doing that. 8 is gonna be unearned fees, versus service actually provided. And what that means, that is a disguised way to pay a referral fee. You might say, and we'll talk about marketing service agreements, but you can only get paid for services actually performed, believe it or not, yeah, you gotta actually do the work to get the fee. It can't just be somebody showing up and saying, "Yeah, you'll send out these flyers for me "and we'll set up a marketing service agreement "and we'll pay you a thousand bucks a month." Turns out you don't send out any flyers, you get that thousand bucks, and you start sending referrals back and forth. You cannot be doing those kind of disguised referral services. You can only get paid for services actually performed. And once again, it's gotta be based on what? Fair market value. So 8 covers the payments allowed. And then 8 are the penalties, up to $10,000, that's per violation, and jail time up to a year, which is probably not gonna happen unless it is systemic and has been going on for a long, long time. But it's really gonna be the $10,000 fine. But more importantly, especially for the loan officers, who cares about the fine, 10,000 bucks is nothing. If you get a suspended license, if you get just kicked outta the industry, I don't know what you do for employment after that. You're pretty much stuck looking for work with friends and family with a suspended license for doing malfeasance-like kickbacks. Okay, so the payments allowed under 8 . Under RESPA, these are the kind of payments allowed. Again, we're working in-house for a lender trying to get a purchase loan closed. You know, we can do attorney fees, fair market value for services performed. We can have the lender paying their loan officer's salary and or commission, that's perfectly fine, makes sense. We can do fees to third parties for goods and services. That's that marketing service agreement, which we'll talk about. We can always do normal promotional and educational activities. And then the employer can always pay a referral fee to their own employee. Let's say we have a loan officer, and she's only licensed in Washington State, a deal comes in that she knows about, but it's for California. She's not licensed in California. She kicks it over to the company, company kicks it over to a loan officer who's licensed in California. That means the lender, and the lender alone, can pay a referral fee to that loan officer. It can't be a referral fee from outside. It's gotta be from the lender to their own employee for sending business to a coworker who is licensed in the state that the loan's gonna take place in. So the agency focus, why do they care about RESPA? Unlike Unfair, Deceptive, or Abusive Acts or Practices, and unlike mortgage fraud, where the loan officer says, "Hey, let's get a little creative "with your banking statements," unlike Fair Lending, Fair Lending, mortgage fraud, and Unfair, Deceptive, or Abusive Acts or Practices, that's obvious to the consumer, they can see it, right? The tricky part about RESPA 8, these kickbacks and referral fees, it's out of the line of sight of the consumer. They don't know about the kickbacks. They don't know about the referral fees. That's happening outside of their view. It's back, you know, these referral fees and kickbacks are taking place in dark, smoky rooms. The consumer will never know about it. So the agencies are hyper-focused on RESPA kickbacks and referrals because the consumers don't know what hit 'em. And we want good people in the industry on the lending side, good people in the industry on the realtor side, because we don't want somebody paying kickbacks to a horrible, horrible realtor. You know, they're paying a bunch of money, or they're collecting a bunch of money. You want to have referrals based on the quality of the person's services. You don't wanna be paying kickbacks to get referrals. So that's kinda what we're doing. The agency is focused on this because it's outside the view of the consumer. They don't know kickbacks and referrals are taking place. So let's jump into RESPA violations. We looked at some of the stuff that you can do under RESPA. Take a drink of water here real quick. All right, so let's jump into all the fun stuff that keeps you employed as in-house counsel and in compliance. It's gonna be the kickbacks for referrals. And we gotta avoid quid pro quos. The rule is, the loan officer and the real estate agent cannot give and cannot receive a thing of value pursuant to an agreement for the referral of business as part of a loan home closing. And what does that mean? We're talking about again, value for referral. Can't have that nexus. Now you can do a one-off. You can take your favorite real estate agent out to dinner to talk about business as a one-off. Get her a cup of coffee, that's fine. We can be human, it's her birthday, get 'em a gift. But we wanna avoid that nexus of providing value for a referral. Once you have that connection, providing the gift card with the hope that the agent sends you business down the road, that's where you have the violation. As a one-off, providing a cup of coffee, that's fine. Providing referrals, that's great, that's encouraged, but you cannot provide value for those referrals. That is a kickback. "Thing of value," this is very broad. Don't let staff, and it's shocking heading into 2023, some staff still think that you can provide a real estate agent up to 25 bucks in value and that's fine. I think it goes back to some kind of IRS regulation back in the seventies or eighties, who knows? But it doesn't matter. There's no de minimus set value. If you provide a $5 gift card, or a $500 gift card, that is a thing of value. So a thing of value could be cash. Could be a service. Loan officers picking up the agent's dry cleaning, that's a service. Could be a promise. "You send me three referrals today, "I'll send you five referrals next month." That's a referral for a referral. A referral is a thing of value. And if you're exchanging a referral for a referral, that is a kickback. And then it can also be a concession. If a loan officer says, you know, "Do some co-marketing with me "and I will never send referrals to your competition." That is a thing of value. So a thing of value, it is very broad. Agencies don't care what the value is. Could be cash, could be service, could be tangible, intangible, they don't care. If it is a thing of value, there cannot be a nexus between that thing of value, the gift card, and a hope for a referral down the road. So a referral, again, it could be for a past referral, could be for a current deal the LO and realtor are working on, or it could be for future potential referrals. Agreements. This is brought, again, as attorneys we know what this means, but if you have a 22-year-old loan processor or loan officer, they may may not be thinking about this. An agreement, it could be spoken, could be written, it could be action, it could be the nod of the head, it could be the absence of a nod of the head. If there is an agreement for that exchange of value for the referrals, that's what the agencies are gonna be focused on. And trust me, there will be a paper trail on this stuff. There's gonna be emails, there's gonna be conversations that are taking place on Facebook, there's just gonna be something out there that talks about exchanging value for referrals, not exactly in those words, but the agencies are gonna know what to look for. Just be very aware of that. Agreements, it could be, you know, it doesn't have to be a written agreement to have that agreement for value for the referrals. So just make sure staff is very aware of that. And then settlement services. Just so you know, it covers real estate loans for the home, I'm sorry, real estate, buying or selling property, home loans, title, inspection, appraisal, escrow and attorney services. So those are kinda the standard settlement services that we're talking about today. So let's take a look at gifts, promotions and educational activities. If you work as a loan officer, you're out there hustling for work, you're doing promotions, you're doing educational activities, and that is encouraged. We want our loan officers out there promoting themselves, promoting the company, bringing in that business so we can pay the rent. And again, keep that jacuzzi heated up out in the parking lot for the break time. And we need the ping-pong table working okay. So RESPA does not prohibit a lender or other SSP, settlement service provider, from giving a consumer a gift or an incentive for doing business with that entity. So what that means is a lender, you know, you can buy your consumer as a closing gift, you get, you know, they buy a house, get a loan from you, you can get them a house plant, get them a $50 gift card to Home Depot to spruce the place up a little bit, that's fine. Standard closing gift from the lender to the consumer. That's perfectly fine. RESPA does prohibit giving a consumer a gift or incentive in exchange for referral to that lender or other settlement services provider, typically that's a real estate agent. So a closing gift is okay, but what you don't want your loan officers doing, and you gotta hammer this home again and again, you don't want your loan officers sending out a bunch of gifts to the consumer with a handwritten note that says, "Please be sure to refer me to your friends and family," because then we have that nexus between providing value for the referral. Closing gift, house plant, gift card to Home Depot, that is compliant. But when you start funneling gifts and money and trinkets to the consumer and nudging them to send referrals to you, that's when the agency is gonna hammer you for a kickback. So let's talk about normal promotional and educational activities. That's, you know, the booze cruise, the lunch and learn. There's a two-part test that the agencies will run. First, is there a quid pro quo? And that means is the activity, the booze cruise, the lunch and learn, co-marketing, whatever it is, is the activity conditioned on a referral? You cannot have a quid pro quo, again, between value and the referrals. Second, is the loan officer defraying the expenses of the real estate agent? So a loan officer might say, well, I'm gonna pay for that realtor's co-marketing expenses. I'm gonna pay for that realtor's educational expenses. I'm gonna pay for that realtor's dry cleaning or gym membership. You cannot be doing that. It can't be direct, can't be indirect. If you're doing something to defray the expenses of the real estate agent, that's gonna be a violation. And there's no bright-line test. It's always gonna be based on the facts and circumstances. So when staff comes to you and says, "Just gimme the bright-line test what we can and cannot do." And it's always going to be situational. What do we know as attorneys on day one? The answer is always: It depends. It depends on what? Are you exchanging value for a referral? And are you paying somebody's expenses? Share the details and we can kind of figure out what's going on here. So the agencies, for the quid pro quo test, is there value being exchanged for referrals? This is what they're gonna look at. It's a two-pronged test to see if you are doing a kickback. First is gonna be scope. So let's take a lunch and learn, or a booze cruise, as an as an example. Lender is hosting a lunch and learn. Are you targeting a specific set of real estate agents? So if a loan officer is always providing a lunch and learn with pizza and brew to the same five real estate agents. If you're targeting the same five real estate agents for promotions or education, that's a small scope. At that point, the agency is gonna say, "Why the hell are you doing educational services "for these same five real estate agents? "They must not know what they're doing in the industry, "because you keep going back to them, "buying them pizza, buying 'em a six pack of Heineken. "You're sitting down talking about the industry. "Why is it these same five agents every time?" That limited scope looks like a disguised referral arrangement, right? You're providing value in the hopes of getting referrals down the road. So when you do the lunch and learns, when you do the booze cruise, you want that scope to be as broad as possible. So you're a loan officer hosting an event, you want to target a broad set of real estate agents, people that have sent you business, people that have never sent you business, people from, you know, a diverse set of zip codes. People that are new to the industry, old to the industry, but you want that scope to be as broad as possible to avoid the quid pro quo red flag. And then frequency. The agency is gonna ask, is the potential referral source, the realtor, a regular and frequent recipient of the gift, promotional activity or educational services? So what that means is, is if you always show up at the real estate agent's office when they do an all-hands meeting and you got your coffee, you got your bagels, and you're showing up every week, every Tuesday you're showing up for their meeting and giving them some refreshments, that's gonna be a red flag that the agency is gonna look at. So scope, when you're hosting a booze cruise, keep that as broad as possible. Frequency, if it's infrequent, that is good. But if you're showing up consistently to the same five real estate agents with the pizza and the Heinekens, that's gonna be a problem. Scope and frequency. No bright-line test. But this is what the agencies are gonna look at. So let's look at defraying expenses. What are we looking at here? That would be a loan officer who is paying for the real estate agent's continuing education or licensing fees. And that stuff adds up. If you have people licensed in multiple states, it adds up. Could be business expenses. You cannot pay for the real estate agent's gas money, insurance, can't be doing that kinda stuff. And then please do not allow your loan officers to pick up the tab for co-marketing. It happens all the time. They just don't think about it. You cannot be doing that stuff. And don't let them get creative. If you have a loan officer who says, "Okay, I know I cannot pay for the real estate agent's "annual licensing fees. "So what I'm gonna do is I'll pay for my favorite realtor's "gym membership, that's outside of the industry." But if your loan officer pays $1,200 for an annual gym membership for the realtor, that frees up $1,200 for that realtor to put toward their licensing, their continuing education and their co-marketing. So you just can't be doing that. Don't let them get creative on how they do this stuff. Just do not defray the expenses that somebody else should be paying. Why? 'Cause everyone's gotta pay their fair share. We know that. Lender-branded stuff. So you got a loan officer and they wanna show up with a lender-branded Frisbee and hand it out to all their real estate agents in the zip code. That is perfectly fine because you're not defraying anybody's expenses. That's the lender providing lender-branded stuff to promote the lender and the loan officer. So lender-branded Frisbee, that's fine, but you can't show up with a lender-branded private jet. We gotta find that dividing line between what kind of branding is acceptable. Frisbee, yes. Private jet, no. You can't put a lender sticker up there on the side of a private jet, give it to your favorite real estate agent and say, "Oh, I'm just just doing some marketing here." So you gotta have common sense and take a look at these programs, 'cause again, it's gonna come down to the facts and circumstance of all of these events that are going on. So you gotta take a look at each one. So closing gifts, this comes up all the time. You got a lender, you got a loan officer and a real estate agent. They're working hand-in-hand for 45 days. They get the purchase done. The consumer moves into their first house. Everyone's happy. Can the lender send a closing gift to the consumer, house plant, $50 gift card to Home Depot? Yes, that's perfectly fine. You're just giving them, you know, a nice house gift. You're being human, you're being good for marketing. You're just saying, "Hey, congrats, here's a house plant." Can the lender, and this one gets a little more tricky, can the lender send a post-close, the home just closed, can they send the consumer a Jelly of the Month Club subscription to the consumer? That's gonna be a red flag. You know, a house plant, $50 gift card, that's within reason. But if your loan officer gets a Jelly of the Month Club for the consumer and it's gonna go for the next 10 years, what does that look like? That looks like the loan officer wants to be top of mind with that consumer, and they're saying to the consumer, indirectly, without words, just a nod of the head and a big old jar of jelly that's showing up every month that says, "Keep me in mind for your friends and family. "Send business my way." So that's a red flag. Can the lender and the realtor go 50/50 on a closing gift to the consumer? Yes, lender pays 50 bucks, realtor pays 50 bucks, they get a hundred dollars gift card to Home Depot, send it to the consumer, that is fine. Next, can the lender send a closing gift to the realtor, a bottle of wine? Nope. And this happens all the time. You'd be surprised. And RESPA has been on the books for decades. This stuff still comes up. A lot of times if you have a new loan officer, they come over from a, let's call it a bad shop, they show up at your shop, and you're trying to do things the correct way. And they say, "Well look, we've always "been sending real estate agents a bottle of wine." You can't do that. You cannot send an agent a $35 bottle of wine every time that a loan closes, because that is buying influence and indirectly telling that realtor to send business your way down the road. And we cannot do what? Cannot exchange value for the hope of a referral down the road. And then also, can a lender buy a closing gift for the consumer on behalf of the real estate agent? And I see this one come up too. And you know you can't be doing that. So just be smart about it. Pay your fair share. Pay a fair market value. Closing gift for the consumer, A-okay. Lender cannot get a closing gift for the real estate agent. And the lender cannot pay for a closing gift to the consumer on behalf of the real estate agent. Good times, right? All kinds of stuff that you cannot do. But, you know, we gotta keep in mind this is the most expensive, complex, and rare financial transaction that a consumer's gonna go through, so we gotta have these protections in place. We want consumers working with good loan officers and good real estate agents. We don't want to be sending business around the industry because somebody is funneling goods, and you know, a bunch of money to us, or to them. We don't want that kind of stuff happening. We wanna do referrals based on, "Hey, this real estate agent "is really good at what she does. "I wanna send my consumer to that real estate agent." We don't want it based on kickbacks for who we send referrals to. So the stuff that comes up on a day in, day out basis. And it's always good to send out little reminders on, you know, a weekly basis or every month just to kind of keep it top of mind. Quid pro quo, nexus between the value and the referral, can't be doing that. Loan officer shows up on Tuesday morning with the coffee delivery to their favorite real estate agent's office. Talked a little bit about that. You cannot be doing that. As a one-off, it's okay, right? We can be human, we can be friendly, we can show up every once in a while, buy that loan officer a coffee, take that realtor out to dinner every once in a while. But it's just you don't want to be doing it on a regular and frequent basis. That's when the agencies are gonna have a problem with you. And then when you do stop by the real estate agent's office, so the loan officer shows up with bagels with maybe a little bit of cream cheese and some coffee, no decaf, just the good stuff, you want to make sure that loan officer does a little spiel on the lending services, a little market update, drop off some flyers, some business cards, do some marketing on behalf of the lender when you show up with the bagels and the coffee, because you always want to be marketing your services when you're doing this stuff out in the industry. Just don't show up with the bagels and the coffee, which is value, drop it off and leave. You gotta do a little bit of work, little bit of song and dance, to let them know about your services with the bagels and the coffee. So, lender lunch and learn to the same broker/real estate agent? Nope. Again, we wanna avoid that because the agency will say, "Why the heck are you doing educational services "for the same real estate company every week? "They must not know anything about the industry, "because you keep going back out there "with your pizzas and your Heinekens. "They must not be very good. "Maybe you should spread the wealth "and hit a few more real estate agencies." And again, agencies know what to look for. They do these investigations all the time. If they see frequency, they see you going out there to the same shop, they're gonna ask questions about that. And then the case of wine to the consumer for future friends and family referrals. No, you cannot do that. House plant, good. $50 gift card to Home Depot, good. But a case of wine, the value's creeping up there to the red flag mark, and you're just making it indirectly known, you're nudging the consumer, saying, "Hey, I'm gonna be good to you. "I'm gonna send you some stuff "and I want you to refer your friends and family to me." So just avoid that kind of stuff as much as you can. Oh boy, lender credits. I wish this one was not happening, but you'll see it every once in a while on the co-marketing flyers at open houses. Gotta be careful with that. Lender credits to the consumer. So you have a co-marketing flyer and the lender says, you know, "Use me for a loan and I'll give you a 2% discount." Or you get up to a $2,000 discount. A lender credit to the consumer for lender services, that is compliant. A real estate agent discount to the consumer for real estate services, that is also compliant. So lender discount for lender service is good. Real estate agent discount for real estate services, that's good. What you cannot have happen is a lender discount to the consumer on that flyer that says, "You get a $2,000 credit discount "if you use us as a loan officer "and the real estate agent on a purchase." And so typically you go to an open house, you know, the consumer looks around and says, "Yeah, that's fine, what else you got?" And you have that flyer, and the loan officer and the real estate agent are on there. You cannot be nudging the consumer to use the loan officer and some other real estate agent and give them a discount for that. Lender discount for lender services, good. Real estate discount for real estate agents is good. Lender cannot be providing an incentive to the consumer only if the consumer uses the lender and their favorite real estate agent. So the kind of stuff that's gonna show up for a promotion on educational activities between the loan officer and the realtors, it's gonna be, you know, the postcards that get sent out to the real estate agent's firm, open house flyers, it's gonna be website shares, social media blasts, kinda the new one these days is you'll see real estate agents and loan officers, they will set up a joint social media site, let's say on Instagram. And you gotta be careful of that because who's doing what? Who's doing all the work on the maintenance and the research for the flyers, or for the social media blast? Who's writing it out? Who's taking care of all this stuff? 'Cause that's not free, right? Somebody's taking time to write the post, to do the research, get the stats, keep it up to date. That has value to it. So you gotta be careful on who's doing what, because why? Everyone's gotta pay their fair share, no more, no less. Everyone's gotta pay fair market value. You could have an LO and a realtor, they're buying leads. They could be doing lunch and learns out there for consumers and they might go to a conference and they're splitting booth space. If they are splitting booth space, and the realtor has 75% of the booth, and the LO has 25% of the booth, how do you wanna split that up on the invoice? What's gonna show up on the expense report? Because the expense report and the invoice and those emails that could be looked at by the agency when they come out here. If it's a 75/25 split for space, why would you split that 50/50? If you have an open house flyer, and it's 75% for the open house, 25% for the lender, why would you split the cost 50/50? The agencies are gonna ask you about this stuff. And kind of going back to what we talked about initially, you may not get in trouble by the agency, they've only so many people. But guaranteed, your competition is gonna find out what you're doing and your competition will contact the agencies and then the agencies will contact you. So expenses, this is how you wanna divvy it up. And this one has come up with the Washington Department of Financial Institutions. Expenses. Let's take a open house flyer as an example. Expenses between the loan officer and the real estate agent. It's not just the flyer itself, right? 'Cause there's value to creating all this stuff. So the expenses between the loan officer and the real estate agent, you gotta take a look at the concept. Who came up with the concept? Who did the graphic design? There's time involved in that. Who did the printing? If you print out a thousand colored copies for an open house, that is not cheap. And you can find out what the cost is per copy because you have a commercial, you know, you have this big Xerox machine weighs a thousand pounds and the color cartridge says this will produce 1000 copies. And if that cartridge costs a thousand dollars, and it produces a thousand copies, you can find out and kind of figure out who pays what. And if the lender is picking up those expenses for the concept and the graphic design and they're using their printer, that has value. You gotta figure out who's paying what, 'cause why? Everyone's gotta pay their fair share. And then also distribution. It's not cheap to send out postcards. But just don't think of expenses, 'cause states are looking into this, in the co-marketing world, between a loan officer and the real estate agent, who's paying for what? That's not just the flyer itself, it's all the stuff that goes behind that. It's the lender's marketing team working on the graphic design and the printing and the cost involved in that. So be aware of that. So these are kind of the safe harbor-ish stuff that you can keep in mind. Again, there's no real safe harbor. There's no bright-line test. But you just wanna show that you know what the hell you're doing and you have systems set up to protect the company, the staff, and the consumers. So it's not required under RESPA, but I strongly recommend you have a co-marketing agreement. So when the loan officer and the realtor are going out there and doing their co-marketing stuff on a day-to-day basis, you have a written co-marketing agreement that explains all the rules and regs under RESPA. And that's gonna make it very clear that the real estate agent is responsible for compliance on the real estate side, and the lender is responsible for compliance on the lender side, because what might happen is if the lender's marketing team is putting together these flyers and there's a compliance issue, a legal issue, regarding what is said in the copy for the real estate agent, the in-house counsel for that real estate agency is gonna try to put the blame on the lender because the lender had the final look at the flyer, right? So make it clear that you're gonna follow RESPA, everyone pays their fair share. And make it very clear that the real estate agent is responsible for the compliance of the real estate stuff that goes into the co-marketing programs. Third party valuation. This one is not practical if you have a small shop, but if you can, try to get a third party valuation done on the co-marketing. And what that means is you have an independent third party. They have no incentive here. Have an independent third party look at the co-marketing programs and say, "Okay, this looks good. "Everyone's paying their fair share. "Prorated expenses. "And we have something that's based on fair market value." If you can get a third party evaluation, that's really good. But at the very least have a co-marketing agreement that sets up the arrangement, that says we're gonna follow RESPA. Everyone's paying their fair share. And realtor is responsible for realtor compliance. So let's do a quick summary of gifts, promotion, educational activities, 'cause this is what you're gonna deal with day in, day out as in-house counsel and compliance. We know that RESPA violation, that is when we have a nexus between a thing of value, $5 gift card, and the prospect of a referral down the road, right? And value, that can be cash, it can be services, it can be a promise, it can be a concession. Value is value, and it's very broad. Referrals. It can be past referral, present or future referral. And that referral test, we want the scope of programs as wide as possible. Loan officers hosting a booze cruise, lunch and learn. You want to invite a wide spectrum of people from the industry, people that have sent you referrals, people that have never sent you referrals. We want the scope broad. And we want the frequency as limited as possible. If your loan officer works with their favorite real estate agent all the time, and if you're showing up with those bagels and coffee all the time to the same real estate company, it's gonna kind of fail that frequency test. So scope, broad. Frequency, limited. And then also defraying the expenses. Don't allow your loan officer to cover the co-marketing expenses for their favorite real estate agent. Don't let them buy gifts for the consumer on behalf of the real estate agent. Don't let them pay for the dry cleaning, gas money, car insurance, when they're out there doing their open houses. Don't let your loan officer get creative with that and think, "Well, okay, I'm gonna pay for their gym membership, "that's outside of the industry." No, that's indirectly freeing up that $1,200 for the real estate agent. So just be very clear on this stuff. And this sounds obvious to us, but if you're new to the industry, this is the kind of stuff that staff gets into. They pick up bad habits before they get to your shop, or they're brand new and they're not thinking about this stuff. So you gotta make sure that we're communicating this frequently to our staff to keep them outta trouble. So malfeasance, this is what kickbacks is all about. It is knowingly exchanging value for that referral. Just don't do it, right? If you make mistakes, misfeasance, you can live to fight another day. But if it's malfeasance, the agencies are gonna come after you. And keep in mind, agencies have limited staff, but sooner or later, if you're doing stuff the incorrect way, your competition's gonna find out about it because you have staff, they don't like the way your guys are doing things. They wanna do things the right way. So staff leaves, they go to a different shop, they talk about what was going on at your shop. Then the competition contacts the agency, agency contacts you, and you're gonna be in trouble. And you're gonna get a bad reputation, bad for the company. And it's really bad for staff if they get a banged up license for malfeasance. Hard to get a job after you get a suspended license in the industry. So let's talk about marketing service agreements. Man, these are allowed, but they are unpopular with the agencies. And unlike a co-marketing agreement, which is a loan officer and a realtor collaborating, a marketing service agreement is essentially a loan officer paying a lending, a lender paying a real estate company to do marketing on their behalf. So co-marketing is collaboration. Marketing service is party A paying party B to do marketing on their behalf. So that would be an example of, an example would be a real estate agent who's coordinating a bunch of postcards to send those out on behalf of the lender. So that would be an MSA. So MSAs are allowed, but they're unpopular. And expect to be tested on this if your company does get involved in MSAs. So what do we gotta do here? What is the agency focus? You get to the exam, you get to an investigation, man, what do we know? Kind of similar to the CMAs. With an MSA, the agency is gonna be focused on fair market value. Did you pay fair market value for the services performed? Second, were the services actually performed? So as an example, lender pays real estate company a thousand dollars to send out a thousand postcards per month. And the real estate company never sends out a damn postcard, because they know this is really just a disguised way to funnel money from the lender to the real estate company. And the real estate company is sending all their referrals back to the lender. And so agencies are gonna pick up on that. If you pay a real estate company a thousand bucks to send out a thousand postcards, a thousand postcards gotta be sent out. Services actually have to be performed to avoid that nexus between providing value, the fees, and the referrals. So the service is done sending out those postcards. It has to actually be actual and necessary, and not nominal. So what that means is if you have a deal set up, instead of sending out a thousand postcards for a thousand bucks a month, whatever it is, you're gonna pay somebody $5,000 to send out five postcards per month. So it can't be nominal. You just don't play around with trying to find ways to funnel money from the lender to the real estate company. So the services have to be actual and necessary and it can't just be nominal, 'cause then it looks like you're providing what? You're providing value for a referral, which is a kickback. And then always keep in mind, marketing should go to a wide audience. One of the things I'm really concerned about in the industry is the rise of artificial intelligence and the ability to pinpoint the exact demographics of the type of consumer that you wanna market to. The problem with that is that it's going to kind of lead to some fair lending and discrimination cases. If you can pinpoint the type of salary, and FICO, and neighborhoods you want to get into, that's gonna create a real problem with marketing. So when we're talking about marketing, putting these programs together, whether it's co-marketing or MSAs, we want it to be as broad as possible and get our message out there to as as broad a cross section in the community as possible. So MSA protections. Safe harbor-ish. Again, the third party valuation on the front end, if you can do it. If you can get a third party valuation done on the MSA that says, "Yeah, this makes sense. "It looks like it's fair market value "and you're paying the right amount of money "for the services being done." So get that done on the front end if possible. On the back end, what you have to do, no questions asked, you have to audit these services. So if you pay a thousand bucks, and those flyers gotta go out the door, a thousand per month, you gotta be auditing that. You gotta be making sure that those services are actually being performed and have evidence of that, because at exam time the agencies are gonna ask questions about it. If there is a fee change on the MSA, have a valid reason. Yeah, it's fine, fees can change. So if the real estate company sends out a thousand flyers a month for a thousand bucks per month, and the flyers go up to 5,000 bucks per month, that's more work. So the fees can change, that's fine. That is output-based. You went from 1,000 flyers to 5,000 flyers. Gotta pay more for that, that makes sense. What doesn't make sense is if you are outcome-based. So if you send out a thousand flyers per month for the lender, and it turns out 80% of the business is coming in as a result of those flyers being sent out, if you decide to change the fee at that point based on the outcome, that's gonna be a problem, because that is gonna be what we call an indirect referral fee. So if there is an output change, you're sending out more flyers, the fee can change. If it is outcome-based, that's gonna be a problem. You don't wanna be doing that stuff. Also, you wanna disclose to consumers that it is a paid advertisement. Make it very clear when the real estate agent is doing marketing services for the lender. Disclose that to the consumer. And then also keep in mind that co-marketing agreements, those are distinct from MSAs, and you gotta make sure that is clear to staff. CMA, that is collaboration between the agents, the loan officer and the agent. An MSA, that is paying a real estate company to go do services for you. Shiny objects. There will be a new sparkling co-marketing program, MSA program, that comes up every year. And staff is gonna show up in your office and are gonna say, "Man, we've got the greatest program here. "We think it's RESPA compliant, what do you think?" And what do we go back to, what's our fallback? Okay, first the new shiny object, that's fine, but we know what the rule is. One, did everybody pay their fair share, no more, no less? And is everybody paying fair market value? Gotta hammer that home again and again and again. Whatever the shiny object is, pay your fair share and pay fair market value and you're good to go for the most part. So let's take a look at some best practices here for attorneys. You're new to the industry and you're looking at some different lenders, you're coming over from the ice cream industry. You just got, you know, you got tired of all those free delicious ice cream sandwiches. You want to get into the lending game. These are things to keep in mind before you go to work for a lender. The same way that a prospective employer is gonna do due diligence on you, they're gonna do a criminal background check, civil check, they're gonna look at your FICO, you need to do due diligence on those potential employers. And so what that means is when they reach out to you and say, "We need to do a background check," you talk to them and say, "You know what? "I'm doing a background check on you as well." And that's a fair trade. You gotta ask the lender to disclose to you if they have employees with public consent orders or enforcement actions on file at the NMLS. These are public documents. They're available for consumers and prospective job applicants to look at to see if it's a company they wanna do business with. And the reason that's so important, if you are interviewing with a lender and they have 2000 loan officers, there's no way for you to know what kind of stuff is going on with those loan officers. So HR is gonna know, 'cause they hired these people, and you wanna reach out and say, "Okay, you know what? "Let me know what consent orders, if any, "are on file for your staff, "because I wanna take a look at that, right?" Then you wanna take a look at consumer complaints. You wanna take a look at Zillow, Yelp, Google reviews. Probably 85% of the online reviewers are day drinking, but you can still look for trends and patterns, and that's what we're looking for. Make sure, before you sign that offer letter, it's a fair trade, company does a background check on you, a lender does a background check on a loan applicant, as a prospective employee, just say, "You know what, there's no way for me "to due diligence. 2000 loan officers. "Just tell me in advance, do you have people on staff "who have consent orders for bad stuff "that might have happened?" So you wanna take a look at that. And then how to evaluate it. You wanna take a look at that, again, through the three-part test here. Bad acts don't need to be a deal killer, but you wanna make sure you look at, do the bad acts involve misfeasance or malfeasance? Is it ancient history or recent? And is it a one-off or a pattern? And if that prospective employer has a bunch of loan officers, and they have consent orders with allegations of malfeasance, it's all recent and it's a pattern of activity, that's probably a company you want to pass on, because eventually you're gonna have to sign off on these certifications at exam time or during investigations, and you put your name on that, you own it. Staff training. Make sure that you are involved as much as possible on staff training. The first 30 days is critical, especially if you have staff coming in from bad shops. They worked at a bad shop, they have bad habits, you want to get to them as soon as possible. And also you want to protect staff who are coming in who are new to the industry. A 22-year-old loan processor, he or she doesn't know where to turn. You want to be there as a resource for them. Cross-training. You want to cross-train staff as much as possible. You think that the departments are all gonna get along, but damn, they fight, the loan officers and the loan processors and the underwriters and the closers. These are four distinct functions within the company and they fight like hell all the time 'cause they're trying to get these deals done and closed within 30 days. Transparency. Keep in mind, nobody fears the agencies. They just don't, because they're not showing up every day. But you should fear your competition. You should fear former staff contacting the agencies and doing a whistleblower on you for bad behavior. So that's the kind of stuff that does happen. Agencies, you might see 'em one once every 18 months, whatever, but you should fear your competition. And everybody's connected. We're on LinkedIn, we're on Listservs, we're all talking to each other and we know what's going on. As I always tell executives, a manager inside the company, whatever the hell is going on inside the company, the bad stuff, you can be sure that everybody in the company knows about it, or they have some version, they have some version about what's going on, and that's gonna get out to the competition as staff kind of moves around. Company culture. You're gonna have a talent flight if you don't get in front of this stuff. Seen this happen. Especially with loan processors, if they're being pressured to do stuff that's just not great. What happens is all the talented staff leave and they go across the street and what happens is that your company will start to attract and retain all the bad apples in the industry. And you don't want that. These are some updates and agency links for you to put on your computer. Keep track of CFPB updates. They will update the industry on, you know, guidance and Q&As on the regulations, like RESPA. You wanna be taking a look at CFPB enforcement actions. That's a requirement. You have to be aware of how the CFPB and the states are handling the enforcement actions. They'll tell you what's important to them and what those guidelines are as far as what can and cannot be done. Don't be shy about the whistleblower program. If you're working at a company and they get in trouble, agency shows up, your company's in trouble, or there's an investigations, don't compound the problem for your shop by not having a whistleblower policy and procedure and training. Agency shows up, your company did something really stupid and you're not doing whistleblower training and you don't have a whistleblower policy and procedure, you just made it much worse for yourself. So final tips for RESPA co-marketing and kickbacks. We're always concerned about exchanging value for referrals. Value could be cash, service, promise, concession. Scope: We want that as broad as possible in the programs. Could be lunch and learn, booze cruise. Keep the scope wide. Frequency: Keep it as infrequent as possible. If you're providing, you know, those lunch and learns to real estate, to people in the industry. Defraying expenses: Pay your fair share. Do not pay for other business expenses. Could be direct or indirect. Don't pay for that gym membership because that $1,200 is freed up for the real estate agent to pump back into their business. Always pay fair market value. And then if possible, try to get third party valuations done for CMAs and MSAs. And that's what I got for you today for RESPA, co-marketing and kickbacks. We laughed, we cried, we cajoled, but this is something you're gonna have to deal with day in, day out at the company. So hopefully this helped out. Questions, comments, feel free to reach out to me. My contact information is on the back page. Hopefully everybody has a great end of 2022, and restful. And hopefully you're getting ready for 2023. As for me, it is World Cup time. I am logging off now and I am gonna go watch the semi-finals. Go France! All right, take care.