Hi Bizlaw. Very helpful. I accepted your answer. Here is some feedback from CFA in italics bold underlined.....Can you provide more feedback for another fee?
CFA is NOT a Financial Advisor or a real estate broker - and need not be registered as that is NOT the role we play.
This creates an interesting situation in several respects. If FC was relying on CFA to set up the arrangement in accordance with applicable law, then CFA could be said to acted in equitably in setting up an arrangement it knew would not be legal for the purpose of taking a fee otherwise earned by FC for its own benefit.
The "fee" being paid to FC is nothing more than a referral fee and is paid directly from escrow as indicated in section 6 on page two of agreement.
That circumstance could expose CFA to liability notwithstanding the fact that FC is not licensed in CA.
Again, no licensing is required for FC to receive a referral fee for business referred to our program.
The solution is to have CFA reduce its fee by the amount owed to FC and have Client pay the fee due FC directly to FC.
This is not acceptable to our funding partner and / or collateral partners. The initial fee paid covers ALL parties and is itemized in the draw down to meet full disclosure requirements. Capital and Collateral partners allow NO outside fees to be paid and therefore require that FCs fees come from the fee's already negotiated with the capital and collateral providers.
That leaves all parties where they expected to be. FC and CFA then operate as joint brokers and FC is not a sub broker. Client in making the payment at closing to FC is doing so in accordance with the laws of X which is permissible and CFA does not share any fee with a person it is not permitted to.
All parties are paid directly from escrow, protecting and fully disclosing all parties to the client - thereby meeting all contract and disclosure requirements.