Don’t risk your Real Estate License
Many Real Estate Agents risk their license everyday without knowing it. Generally this is by stepping outside of their official duties, and stepping into areas they shouldn’t. They usually don’t mean to, and are trying to be helpful, but…
Title Company Risk
Did you know that most states have insurance solicitation laws that may apply when you refer a client to an in-house title firm (or one with which you have a Marketing Service Agreement)?
That means that you might need a title insurance license to make certain referrals. The safest thing a real estate agent can do is to discuss title, what it is, and let their clients decide who to use.
This includes real estate agents automatically ordering title services from their preferred title company without talking to clients and getting their permission.
Did you know that mortgage laws also prevent non-licensed mortgage originators from discussing loans, loan terms, programs and interest rates? A Mortgage Loan Originator License must be obtained BEFORE doing any of the following residential property mortgage loan activities: soliciting, originating a loan application, offering, or negotiating any residential mortgage loans.
Can a Real Estate Agent refer a client to a lender or Loan officer? You bet, but they need to be very careful if they suggest loan programs, or talk about interest rates. A Real Estate Agent’s best bet is to simply tell the client that they are not a lender, and they need to ask the Loan Officer all mortgage questions.
CFPB (Consumer Financial Protection Bureau)
“Solicit” means attempting to sell or asking or urging a person to apply for a particular kind of insurance or loan from a particular company, and no person shall sell, solicit, or negotiate any insurance or mortgage without a license.
Regulators at the CFPB are turning their heads towards Real Estate Agents, now that they have caused a lot of headache in the banking, mortgage, and credit card industries. Just like giving legal advice, it is generally best for real estate agents to simply avoid the potential trouble, and think before you act, even if your heart is in the right place by not giving advice and referrals.