STOP risking your real estate license
Do you unintentionally give legal advice to your clients? Most real estate agents are very aware, and try to stay clear of giving any legal advice. Unfortunately, there are plenty of agents who have crossed that line, and are now facing plenty of headaches and lawsuits.
Have you ever instructed a client to stop paying their mortgage? You’ve given legal advice.
Legal advice is one thing… and rightfully most agents successfully avoid putting themselves in trouble, yet everyday they violate RESPA and the Truth in Lending (TILA) laws by giving mortgage advice.
Yes, mortgage advice. Punishable by a $10,000 fine and jail time!
If you have ever directed a client to a specific mortgage program? Maybe a program offered from “your guy” versus a program from another lender because you simply want to work with your guy versus the unknown loan officer??? Then you are walking a very dangerous line.
Have you ever given mortgage advice simply because you believe you are looking out for the customers best interests? Again, you are walking a fine line.
I have a mortgage originators license. I work 50 hours a week, and have for the last 17-years taking full applications, properly analyzing the clients financial situation, and directing them to the product that I believe best fits them. Even with that, a client can sue me for “putting them in the wrong loan.” You don’t have a mortgage license, and spend most of your time helping people buy and sell homes. Ask yourself. Do you really have any business giving mortgage advice?
The Real Estate Settlement Procedures Act, (RESPA) was enacted to help protect consumers when they buy and sell real estate, and to teach them to be better shoppers.
Prohibited practices for agents include many items. One of the most commonly violated section involves “shared expenses”. RESPA does not prevent joint advertising between two settlement service providers, such as a mortgage company and a real estate broker advertising their services on the same brochure or newspaper ad. However, each advertising party must pay for his share on a proportionate basis.
Another common violation has to deal kickbacks. Kickbacks of any kind are prohibited. Even small promotional items with the agent’s name on them can be considered a thing of value for the referral of business as it offsets the agent’s marketing expenses.
My advice? Learn the phrases “consult a lawyer”, and “consult a licensed mortgage professional” to avoid risking a legal headache and your license.
For more information regarding the Act, you can find it in Title I of the Consumer Credit Protection Act. The act is enforced by the Federal Reserve Board via Regulation Z (12 C.F.R. Part 226).