Real Estate Settlement Procedures Act
U.S.C. Sections 2601 - 2617

The Anti Kickback Provision and the Exception for "Affiliated Business Arrangement"

Providers of "settlement services" (such as mortgage lenders, nonprofit homebuyer education programs, mortgage brokers, title insurance companies, real estate brokers, etc.) can not pay or receive a fee (or anything else of value) as compensation for simply making a referral to another provider for the provision of "settlement services". Payment, however, is allowed as compensation for services actually performed. One exception is a referral to a related entity through an "affiliated business arrangement" - provided the proper notices are given. Here are clippings of the relevant part of the statute

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Here is a breakout of the relevant sections of RESPA dealing with anti-kickback
(click here for the entire RESPA statute)


Section 2602. Definitions

[irrelevant sections omitted]

(3) the term "Settlement services" includes any service provided in connection with a real estate settlement including, but not limited to, the following: title searches, title examinations, the provision of title certificates, title insurance, services rendered by an attorney, the preparation of documents, property surveys, the rendering of credit reports or appraisals, pest and fungus inspections, services rendered by a real estate agent or broker, the origination of a federally related mortgage loan (including, but not limited to, the taking of loan applications, loan processing, and the underwriting and funding of loans), and the handling of the processing, and closing or settlement;

[irrelevant sections omitted]

(7) the term "affiliated business arrangement" means an arrangement in which

(A) a person who is in a position to refer business incident to or a part of a real estate settlement service involving a federally related mortgage loan, or an associate of such person, has either an affiliate relationship with or a direct or beneficial ownership interest of more than 1 percent in a provider of settlement services; and

(B) either of such persons directly or indirectly refers such business to that provider or affirmatively influences the selection of that provider; and

Section 2607. Prohibition against kickbacks and unearned fees

(a) Business referrals

No person shall give and no person shall accept any fee, kickback, or thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or a part of a real estate settlement service involving a federally related mortgage loan shall be referred to any person.

[irrelevant sections omitted]

(c) Fees, salaries, compensation, or other payments - Nothing in this section shall be construed as prohibiting the following:

[irrelevant sections omitted]

(4) affiliated business arrangements so long as

(A) a disclosure is made of the existence of such an arrangement to the person being referred and, in connection with such referral, such person is provided a written estimate of the charge or range of charges generally made by the provider to which the person is referred


(i) in the case of a face-to-face referral or a referral made in writing or by electronic media, at or before the time of the referral (and compliance with this requirement in such case may be evidenced by a notation in a written, electronic, or similar system of records maintained in the regular course of business);

(ii) in the case of a referral made by telephone, within 3 business days after the referral by telephone,[1] (and in such case an abbreviated verbal disclosure of the existence of the arrangement and the fact that a written disclosure will be provided within 3 business days shall be made to the person being referred during the telephone referral); or

(iii) in the case of a referral by a lender (including a referral by a lender to an affiliated lender), at the time the estimates required under section 2604 (c) of this title are provided (notwithstanding clause (i) or (ii)); and any required written receipt of such disclosure (without regard to the manner of the disclosure under clause (i), (ii), or (iii)) may be obtained at the closing or settlement (except that a person making a face-to-face referral who provides the written disclosure at or before the time of the referral shall attempt to obtain any required written receipt of such disclosure at such time and if the person being referred chooses not to acknowledge the receipt of the disclosure at that time, that fact shall be noted in the written, electronic, or similar system of records maintained in the regular course of business by the person making the referral),

(B) such person is not required to use any particular provider of settlement services, and

(C) the only thing of value that is received from the arrangement, other than the payments permitted under this subsection, is a return on the ownership interest or franchise relationship,