Skip to main content
A group of colleagues gathered around and conversing.

RESPA Section 8: Key Considerations & Best Practices

Discover key considerations of RESPA Section 8 and compliance risk management best practices.

Introduction

Giving gifts is a universal way to show appreciation. When it comes to financial institutions and their lending activities, that simple gesture becomes more nuanced as the potential for compliance challenges arises. Specifically, Section 8 of the Real Estate Settlement Procedures Act (RESPA) contains prohibitions that should be considered when looking to maintain compliance and avoid potential regulatory scrutiny.

Understanding RESPA Section 8

RESPA provides consumers with improved disclosures of settlement costs and reduces the costs of closing by eliminating referral fees and kickbacks.1 The legislation, initially passed in December 1974, has undergone several changes and developments, including Section 8.

RESPA Section 8 prohibits certain actions associated with federally related mortgage loans.2

List of certain prohibited actions associated with federally related mortgage loans under RESPA Section 8.

  • RESPA Section 8(a) prohibits kickbacks for business referrals related to or part of settlement services involving federally related mortage loans.
  • RESPA Section 8(b) prohibits unearned fee arrangements, i.e., splitting charges made or receieved for settlement services, except for services actually performed in connection with federally related mortgage loan transactions.
  • RESPA Section 8(c) identifies certain payments that are not prohibited by Section 8.

These prohibitions generally apply to any person, which RESPA defines as individuals, corporations, associations, partnerships, and trusts. 

RESPA Section 8 prohibits any person from giving or accepting:

  • A fee
  • A kickback
  • A thing of value

pursuant to an agreement or understanding (oral or otherwise), for referrals of business incident to or part of a settlement service involving a federally related mortgage loan. A “thing of value” is broadly defined in RESPA and Regulation X.3 It can include:

Illustrates “things of value” defined in RESPA, such as money, things, special rates, discounts, and trips.

Things of Value:

  • Special rates or banking terms
  • Things
  • Discounts
  • Trips
  • Money

The Challenge of RESPA Section 8

Under RESPA Section 8(a), gifts and promotions generally are “things of value” and, therefore, could, depending on the circumstances, violate RESPA Section 8(a). If the gifts or promotions are given or accepted, as part of an agreement or understanding, for referral of business incident to or part of a real estate settlement service involving a federally related mortgage loan, they are prohibited. There is no exception to RESPA Section 8 solely based on the value of the gift or promotion4.

Regulation X allows “normal promotional and educational activities” directed to a referral source if the activities meet two conditions5:

  • The activities are not conditioned on referral of business; and
  • The activities do not involve defraying expenses that otherwise would be incurred by the referral source.

Financial Institutions must understand the relationship within their lending division and carefully analyze whether accepting or giving gifts could violate the regulation.

Compliance Risk Management Best Practices

Determining the relationship between your financial institution’s team members and settlement service providers can be overwhelming. Below are helpful tips to address gift giving, sponsorships, and co-marketing.

Gifts

It’s important to periodically identify relationships currently in place; you can see who is receiving and sending gifts within your organization. You can ask questions like:

  1. How was the list of gifts and recipients selected?
  2. Were gifts provided to a large audience, or are the items targeted to prior and ongoing referral sources?

If gifts were only sent to a limited set of settlement service providers, who also happen to be current referral sources or an intentionally targeted group of future referral sources, this may suggest that the recipient is receiving the promotional item because of past or future referrals. Thus, the promotional item may be conditioned on referrals.

If a referral source is routinely and frequently provided with an item or included in an activity, and particularly if that referral source is provided with the item or included in the activity more often than other persons, this could indicate the item, or activity is conditioned on referrals.

Sponsorship

As you plan for 2025 activities, check in with your plans for sponsoring educational events and luncheons. You may have loan officers asking to work with local realtors to provide educational events. These types of events should be examined on a case-by-case basis. For example:

  1. A loan officer presents a request for approval. They would like to sponsor an event or provide the lunch, on behalf of an organization that provides services to federally related mortgage loans.
  2. Your organization routinely hosts complimentary seminars on recent real estate market developments. The seminars are open to the public and they are advertised to all of the area’s real estate agents regardless of their status as referral sources.

These two examples could expose your organization to risk if left unchecked. The first example may be considered a “thing of value” because it defrays that organizational expense. The second example may meet the definition of a “normal promotional and educational activity” under Regulation X, because 1) admission to the courses are not conditioned on referrals, and 2) the courses are not defraying expenses that otherwise would be incurred by persons in a position to make referrals, as they are routinely provided at no charge for everyone, not just referral sources.

Document your efforts and discussions to help ensure all activities are reviewed with RESPA Section 8 in mind.

Co-Marketing

Marketing efforts can often bring multiple departments together. For example, lending teams may wish to partner with settlement service providers, which is covered under RESPA Section 8.

There is nothing in the RESPA rules that would prevent joint advertising; however, you must exercise caution when reviewing these requests because a “thing of value” could be present. There are costs associated with advertising and the creation of materials. If advertising partners do not pay their “pro-rata share” of expenses, you could have a potential violation.

In order to comply with RESPA requirements during co-marketing, verify the market value, and the cost to create, design, print, or publish marketing materials. Maintain your marketing files to help keep track that each participant in the advertisement has an equal share in the cost.

Conclusion

Financial institutions can proactively review their RESPA Section 8 program to help maintain compliance and avoid potential regulatory scrutiny. This diligence will help ensure your organization remains on the right side of regulations and continues to operate with integrity and transparency.

Simple ways to practice this include creating an environment where teams can succeed with clear policies, procedures, training, and monitoring lending team activities (such as gift giving and advertising) to maintain compliance with the bank’s policies and regulatory requirements.

Have more questions regarding RESPA Section 8 or other compliance hot topics? ProBank Advisor® can offer you and your compliance team on-demand access to our experienced compliance professionals, who are primed to answer your questions, look over your policies, disclosures, advertisements, and more.

For more information, please reach out to a professional at Forvis Mazars.

  • 1“Real Estate Settlement Procedures Act (RESPA),” nar.realtor, 2024.
  • 2“Section 1024.14 Prohibition Against Kickbacks and Unearned Fees,” consumerfinance.gov, 2025.
  • 3“Section 1024.14 Prohibition Against Kickbacks and Unearned Fees,” consumerfinance.gov, 2025.
  • 4“Real Estate Settlement Procedures Act FAQs,” consumerfinance.gov, 2025.
  • 5“Section 1024.14 Prohibition Against Kickbacks and Unearned Fees,” consumerfinance.gov, 2025.

Related FORsights

Like what you see?
Subscribe to receive tailored insights directly to your inbox.