Thank you for your patience and for all additional information you have proivided:


I have a brokers license. I run all my loans through another broker for a commission split as it is pretty difficult for a one man shop to get approved by most lenders - volume too small.


The commission from the credit repair company would be paid to ME by the way: it wouldn't run through my broker or be split with him in any way.


Your initial post: I have a CA DRE license and and an NMLS license to do mortgage loans. A credit repair service which I believe to be totally reputable and only charges a fee for results (no upfront fees) offers an affiliate program. Essentially what would happen is that they give me some basic training so that I can discuss credit repair with prospects and take a very short application from them. The application would then be forwarded to the credit repair company and they would pay me a 10% commission. As far as I know RESPA (or any other regulatory agency) would be OK with this because it is not for a settlement service (?) and also it is not a referral fee but instead is for work performed. I believe the compensation for work performed must be reasonable for the amount paid, but not sure if I even need to concern myself with this because this may be outside RESPA. Most of the people I speak to will live outside CA so I couldn't do a MORTGAGE for them if I wanted to. The credit repair company is inside CA


The question is: is the money that the credit repair company a RESPA violation or a violation of any other regulatory agency?

Response: No, it would not be a violation of RESPA since you are not doing any loan closing with regard to the transactions. Also, it would not be in violation of California Credit Services Act since the company is not taking upfront fees and you are a California licensed Real Estate Broker. As a licensed Real Estate Broker, you are not required to register with the Attorney General's Office in order to be an affiliate. However, to make sure that you are following proper procedures, you need to familiarize yourself with The Credit Services Act of 1984 (California Civil Code Section 1789.10 et seq.) and the federal version: The Credit Repair Organizations Act (15 U.S.C.A. §1679 et seq.):

http://www.dca.ca.gov/publications/legal_guides/cr-9.shtml

Credit Services Act of 1984

http://www.leginfo.ca.gov/cgi-bin/displaycode?section=civ&group=01001-02000&file=1789.10-1789.26

The Credit Repair Organizations Act

http://www.ftc.gov/os/statutes/croa/croa.shtm

Hello. I have a follow up question:

The credit repair company pays a 10% commission of any fees that a client that I send them pays. Questions:

1. As I will be paid a PERCENTAGE of sales instead of a flat fee does everything still sound OK to you? ( a percentage sounds more like a referral fee to me than a flat fee. A flat fee sounds more like a fee for services performed to me than a referral fee because it takes the same amount of work to interview someone who spends $500 as it does for someone who spends $2,000). I may be over-thinking this!


Response 1: You are over-thinking it. It does not make any difference whether you take a flat fee or percentage of the sales. What matters is that you are getting paid for the services offered as per your agreement with the credit repair company.

2. You stated in one of your answers that this would be outside RESPA because the credit repair is outside of a loan closing transaction. If the person's credit is repaired by the credit repair company and after it is repaired I help this person get a mortgage is the credit repair commission I get still outside RESPA?



Response 2: Yes, it is because it still does not have anything to do with the closing.

Thanks. One more question (and then I'll pay you again). The credit repair company also offers affiliates the opportunity to drive people to their site via an affiliate link. In other words - all I would have to do is place the affiliate link on my website and if someone clicks on it and signs up for credit repair I get a commission. Essentially this means I am doing no "work" (I'm not interviewing the potential customer or taking a very short application etc.). I guess you could say the "work" was in initially building my website, installing the affiliate link etc. Again, I may be over thinking this. I guess if it is all outside RESPA then none of this matters even if I am a licensed CA DRE broker and NMLS licensee?



Response: You are over-thinking this. You are still being paid for your services. You have already done the work before linking the leads to the company's web site. In any event, you are a licensed California Real Estate Broker and would not be breaking any law for taking fees from the Credit Repair Company for the leads. Did you get you a chance to review the links that I provided you previously regarding California Credit Services Act and the federal version? If you have not done so, you may just want to print the Act out for future reference, at least print out the Summary version, which is on the first link. Here are the links once more:




http://www.dca.ca.gov/publications/legal_guides/cr-9.shtml

Credit Services Act of 1984

http://www.leginfo.ca.gov/cgi-bin/displaycode?section=civ&group=01001-02000&file=1789.10-1789.26

The Credit Repair Organizations Act

http://www.ftc.gov/os/statutes/croa/croa.shtm

All the best,