Question: We are considering an arrangement with our construction builder customers where they would get a set amount of “credit” (points) for every spec loan closed with us. The points would be eligible to apply discounts associated for an annual trip with the Bank’s travel club. In other words, each spec loan booked with us will give them credit to use on the trip cost. The obvious consideration here is RESPA Section 8, but I do not feel like it is applicable. Although this involves residential construction, since they will all be spec loans, these will all be commercial customers and transactions.
Answer: The main concern here would be RESPA Section 8, but you are also correct that if these are commercial or business purpose transactions, they are exempt from RESPA. Otherwise, there is not a prohibition in a referral program for commercial loans. The bank would want to thoroughly document the program, as always, and be sure to monitor for any potential consumer loans and Fair Lending or UDAAP issues.
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.”
Regulation X, § 1024.14(b) – https://www.consumerfinance.gov/policy-compliance/rulemaking/regulations/1024/14/#b
An extension of credit primarily for a business, commercial, or agricultural purpose, as defined by 12 CFR 1026.3(a)(1) of Regulation Z. Persons may rely on Regulation Z in determining whether the exemption applies.
Regulation X, § 1024.5(b)(2) – https://www.consumerfinance.gov/rules-policy/regulations/1024/5/#b-2
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