The rule: no payment for referrals
"No person shall give and no person shall accept any fee, kickback or other thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or part of a settlement service involving a federally related mortgage loan shall be referred to any person. Any referral of a settlement service is not a compensable service, except as set forth in § 1024.14(g)(1)." (12 CFR 1024.14(b))
RESPA is US law; it doesn't apply to Canadian mortgages. Three parts of Regulation X decide most marketing questions:
- "Thing of value" is broad. It includes "services of all types at special or free rates," "trips and payment of another person's expenses," and "the opportunity to participate in a money-making program" (1024.14(d)).
- The agreement doesn't need to be written. It "may be established by a practice, pattern or course of conduct" (1024.14(e)). Payments that rise and fall with referrals are evidence of one.
- Payments must match the work. Paying for services actually performed is allowed. If a payment "bears no reasonable relationship to the market value of the goods or services provided, then the excess is not for services," and the value of the referrals doesn't count (1024.14(g)(2)).
Referral or marketing: where the line is
The CFPB draws it by audience:
"In contrast, a marketing service is not directed to a person; rather, it is generally targeted at a wide audience. For example, placing advertisements for a settlement service provider in widely circulated media (e.g., a newspaper, a trade publication, or a website) is a marketing service." (CFPB: RESPA FAQs, MSA FAQ 2)
A referral is "any oral or written action directed to a person" that affirmatively influences which provider they choose (1024.14(f)(1)). An agent handing a buyer your card is a referral. An ad on the agent's website seen by thousands of visitors can be marketing.
Co-marketing with real estate agents
What decides it is who pays for what.
| Arrangement | Where it lands under Regulation X |
|---|---|
| Joint ad, each side pays its own share of the space | Each pays for its own advertising |
| You pay the whole cost of an ad that promotes the agent | "Payment of another person's expenses" is a thing of value |
| Branded items with your logo given widely | More likely a "normal promotional" activity |
| Items with the agent's logo, or paying their license or CE costs | More likely "defraying" their expenses |
| Payments that track the number of loans the agent sends | Evidence of a referral agreement |
"Normal promotional and educational activities" are allowed if they are "not conditioned on the referral of business" and don't defray the referral source's expenses (1024.14(g)(1)(vi)). The CFPB says promotional items with the provider's own logo are "less likely to defray expenses," while office supplies branded for the referral source are "more likely" to (RESPA FAQs, Gifts FAQ 2).
Marketing services agreements (MSAs)
An MSA is a contract where you pay an agent to market your services. RESPA doesn't mention MSAs. They are legal only when the marketing is actually performed and the pay is "reasonably related to the market value" of it (RESPA FAQs, MSA FAQ 3).
The CFPB lists what makes one unlawful (MSA FAQ 4):
- An agreement to pay for referrals.
- Paying more than the reasonable market value of the marketing.
- Marketing that isn't performed, is nominal, or duplicates other charges.
- An agreement built to disguise kickbacks or split charges.
It also flags MSAs "structured or implemented to provide payments based on the number of referrals received."
Paying for leads and lead platforms
Buying advertising is allowed. The CFPB says "advertising arrangements where actual services are being provided and reasonable payment is being received are compensable services," depending on the facts (CFPB Advisory Opinion, 2023, note 56).
Paying for steering is not. The same advisory opinion says a comparison or lead platform receives an illegal referral fee when it presents lenders "non-neutrally," that steers the consumer, and the platform is paid at least in part for it. Neutral criteria include "APR, objective consumer satisfaction information, or factors the consumer selects" (Advisory Opinion, section I.C.1). Two warning signs it names:
- Higher fees for better placement. A higher fee from one lender "can be evidence of an illegal referral fee arrangement."
- Live transfers. A "warm handoff" of a borrower to whichever lender answers a push notification first is a referral. The opinion says the payment "would be considered a referral fee even if it does not differ among the providers."
The advisory opinion took effect February 13, 2023. It is not on the list of 67 guidance documents the CFPB withdrew on May 12, 2025, though that list did include a related 2024 circular on steering by digital intermediaries (Federal Register, May 12, 2025).
Gifts, lunches and events for agents
"There is no exception to RESPA Section 8 solely based on the value of the gift or promotion." (CFPB: RESPA FAQs, Gifts FAQ 1)
The test is the same two conditions: not tied to referrals, and not paying the agent's own costs. The CFPB's examples of what fails: a settlement agent's prize drawing open only to loan officers who referred business, one entry per referral; and a title company waiving a continuing education fee that agents need for their license (Gifts FAQ 3).
What is still allowed
Regulation X lists payments RESPA does not prohibit (1024.14(g)(1)), including:
- Pay for goods, facilities or services actually provided.
- Your employer paying you for referrals ("an employer's payment to its own employees").
- Fee splits between real estate agents and brokers acting as brokers. This "has no applicability to any fee arrangements between real estate brokers and mortgage brokers."
RESPA Section 8 violations: the penalties
A violation can bring a fine of up to $10,000, up to one year in prison, or both (12 U.S.C. § 2607(d)(1)). Violators are jointly liable to the borrower for "three times the amount of any charge paid for such settlement service" (§ 2607(d)(2)). The CFPB, HUD, and a state's attorney general or insurance commissioner can sue to stop violations (§ 2607(d)(4)).
Example
Shared open-house ad
An agent and a loan officer run a $400 Facebook ad for an open house, each featured equally. Each pays $200: each paid for its own advertising. If the loan officer pays all $400, the agent's half is "payment of another person's expenses."
$1,500-a-month MSA
A lender pays an agent $1,500 a month to "market" the lender. The agent does little marketing, and the lender cuts the payment in months the agent sends no loans. That fits the CFPB's list of unlawful MSAs: payment tracks referrals, not services.
Live-transfer leads
A platform collects a borrower's details, then transfers the call to the first lender who accepts. The CFPB's 2023 opinion calls that a referral, so paying for it is a referral fee.
Different for you?
- The rate and payment wording in your ads: see mortgage advertising trigger terms.
- Calling or texting leads you bought: see TCPA consent for bought leads.
- Agents weighing paid lead programs: see Zillow Flex and Premier Agent cost.
- Brokerage name in co-branded ads: see real estate advertising rules.
- Generating your own leads with ads you pay for directly: see the Paid Ads Agent.