Posted by fiKS on 6/8/05 7:50pm
Msg #43367

New RESPA law re: Conflit of Interest

I heard that there was a new RESPA rulling saying that it is considered a conflict of interest for a Real Estate Agent to also be a Loan Originator. I've searched on the web and can't find anything to confirm what I heard. Does anyone have any info on this? TIA

Reply by TCMN_MN on 6/8/05 10:22pm
Msg #43392

I do not know where that is a new law. I'm a RE Agent AND have my loan originators license. The common sense would say though that you can't originate your buyers loan if you are representing them as their agent in the re transaction....the same thing as you can't do the loan and notarize it as a signing agent. But I have yet to hear of a new law. And that would be state imposed not federal anyways so it wouldn't be across the board for all states. Check your local government.

Reply by Paul_IL on 6/8/05 10:32pm
Msg #43394

There is No conflict of Interest and RESPA does not apply as long as the work is done for both.

Reply by SamIam_CA on 6/8/05 10:43pm
Msg #43399

In MN do you have credible witnesses?

I had a situation where the borrower was Joe Blow Senior - the loan docs were Joe Blow Senior - but his CADL only showed Joe Blow.

Do you think it would be a conflict of interest for the loan originator to act as the credible witness to ID the borrower? As the LO you are not exactly a party to the loan, like the co-borrowing spouse. But then again you do profit from the closing of the loan.

Any thoughts?

Reply by John_NorCal on 6/9/05 12:08am
Msg #43416

Re: New RESPA law re: Conflict of Interest

Sam, In my opinion the mere act of notarizing loan papers as an agent would not be creating a conflict of interest. Way back in 1974 this question arose as notary real estate agents notarizing their own escrows. It was determined that even though the agent was getting a commission, their was no real gain i.e. financial interest in the property. So we continued to notarize our own transactions. The scenario that you paint, with a credible witness, would raise some eyebrows and could be construed as open to fraud. So, in that case I would not have the loan originator act as credible witness. Aside from that, how credible could that loan officer be? Does that person really know the borrower? Best to keep this at arms length.
I'm sure this is one of those scenarios that you have thought up as an exercise! Keep 'em coming!

Reply by SamIam_CA on 6/9/05 9:18am
Msg #43450

Re: New RESPA law re: Conflict of Interest

Thanx for the info!

Reply by fiKS on 6/8/05 11:16pm
Msg #43410

I too applied common sense to the conflict if one is representing the same client in both capacities for the same transaction, which is why I am interested in finding out more information about this, so I heard, new RESPA regulation as of May 2005.

Reply by Paul_IL on 6/8/05 11:52pm
Msg #43414

Not sure where your common sense comes from but I do know a few agents that are also mortgage brokers and handle their buyers loans. There is absolutely no conflict of interest but I would love to hear your opinion of where there would be a conflict.
RESPA's only requirement is to disclose all compensation as broker and agent and that you fully perform the duties you are being paid to complete.

I get RESPA News and have yet to see anything like this.