The Rules of the Road
RESPA — Real Estate Settlement Procedures Act RESPA governs the origination and settlement of residential mortgage loans. Anti-kickback provisions (Section 8): No one involved in a federally related mortgage transaction can give or accept anything of value in exchange for referral of business. You cannot pay a Realtor for referrals. A title company cannot buy you lunch to win business. The line between kickback and legitimate marketing is nuanced — get compliance approval before any arrangement where value is exchanged with referral sources. TRID — TILA-RESPA Integrated Disclosure Rule Replaced the old GFE and HUD-1 with the Loan Estimate and Closing Disclosure. Loan Estimate (LE): issued within 3 business days of application. Closing Disclosure (CD): issued at least 3 business days before closing. Must match LE within TRID tolerance limits. Tolerance Limits Zero tolerance: Origination charges, lender-required services on designated list. 10% tolerance: Some third-party services. No tolerance limit: Prepaid items, escrow, insurance. Fees exceeding tolerance limits require lender cure (reimbursement to the borrower). Affiliated Business Arrangement (AfBA) Disclosures If you or your employer has an ownership stake in a title company, escrow company, or other settlement service provider, you must disclose that relationship in writing when referring borrowers.