Tackling RESPA – 4 Strategic Structures

Navigating Regulatory Compliance with Precision

Implementing a Concierge model in the U.S. requires navigating the Real Estate Settlement Procedures Act (RESPA). The strategy is not avoidance, but precise structural compliance to move away from illegal "handshake" referral fees.

The RESPA Tackle Box

Lenders use specific "safe harbor" structures outlined in Section 8(c) to monetize these relationships compliantly.

Strategy 1: Affiliated Business Arrangements (AfBA)
Mechanism: The lender creates a subsidiary, such as a captive insurance agency.
Compliance: Revenue flows to the lender as dividends (Return on Ownership Interest) from the subsidiary's profits, not as per-lead referral fees.
Strategy 2: Joint Ventures (JV)
Mechanism: The lender and a vendor (e.g., Title or Warranty provider) co-own a new, bona fide entity.
Compliance: The JV must have its own capital, staff, and physical presence to avoid being labeled a "sham" entity.
Strategy 3: Marketing Services Agreements (MSA)
Mechanism: A vendor pays the lender to market services to the lender's database.
Compliance: Payments must be fixed flat fees representing Fair Market Value (FMV), never fluctuating based on the volume of successful referrals.
Strategy 4: The "Value Add" Exception
Mechanism: Framing utility setup or moving services as "bona fide services actually performed".
Compliance: Compensation is based on the distinct administrative service provided to the consumer, ensuring transparency and choice.
Published by Eleos Life
Sources