Fee Splitting
June 14th, 2008 • Related • Filed Under
I recently wrote about a common question I often receive in which an unlicensed LO asks a licensed LO to act as the originator on a transaction, and pass part of the origination fee back to the unlicensed LO. Read the story here.
What are the possible consequences for the licensed LO, the unlicensed LO, the consumer, the mortgage broker, and the lender?
If you were the consumer on a transaction like this, would you want to know about this sort of fee-splitting arrangement? How much would you say would be a reasonable amount to pay the unlicensed LO and the licensed LO…if YOU were the consumer?
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Comment by jaesuk cavner on 11 August 2008:
as a consumer I wouldnt care if the the fee was split as long as my interests are served. but as a LO myself I would have concerns about why the unlicensed LO hasnt attempted to get licensed, or if they were rejected for some unethical reason
Comment by Laura Young on 16 September 2008:
As a consumer I would want to see how the fees are split to be sure I wasn’t being charged unreasonable fees. As a Broker/Lender I would have serious concerns as to why the unlicensed LO is solisiting loans and asking the licensed LO to take on the liability of the transaction.
Comment by Sandi Paradiso on 27 October 2008:
As a consumer, why would I go to someone who wasn’t licensed unless it was a friend and she decided to get out of the business and she was just wanting to make sure I was taken care of. As a LO I would have to asked the question,”why is that person not licensed” what is the reason she is working under the table sort of speek.
Comment by Garry Carlin on 7 November 2008:
Fee splitting is not acceptable. It is illegal and foolish way to lose your license. Especially in these times we have to extra vigilant to not do something out of desperation even though you may not have had a pay check in the last two months. Just don’t risk it!
Comment by Denise Swafford on 9 November 2008:
Splitting fees is receiving unearned compensation which is a RESPA violation. Being that becoming a loan officer is not a difficult task be any stretch why would they not bother to get a license? If I refer someone to a professional whether it be a dog groomer, beautician, electrician…I would never expect, require, or demand compensation as all I have done is told someone I liked the service I received. I am not the one doing the work therefore there should be no compensation.
Splitting fees only serves to increase the cost to a borrower as I never see anyone reducing their fees for the referral.