Free Continuing Education: Good Bargain or RESPA Violation?

When a client asks you to recommend a mortgage lender, closing attorney or home inspector, does your client expect you to recommend a service provider who will (a)  provide the best service for your client or (b) give you the best kickbacks?

The answer is (a). If you answered (b), you’re on your way to violating Real Estate Settlement Procedures Act (RESPA.)

The Real Estate Settlement Procedures Act is a federal law that is intended to protect consumers from overpaying for services related to their purchase of home using a federally backed mortgage.  Section 8 of RESPA prohibits a settlement service provider from “giving or accepting a fee, kickback or anything of value in exchange for referrals of settlement service business related to a federally related mortgage loan.”   Giving something of value, such as money, free tickets to a Patriots game, or a gift certificate to a restaurant with the expectation that you will refer business to him or her is a violation of federal law.  Violations of this section of RESPA can result in criminal and civil penalties, including a maximum fine of $10,000 per offense, imprisonment of up to one year and/or a private lawsuit.

Is it legal for a real estate licensee to accept free continuing education from a mortgage broker, title attorney, or other settlement service provider?  Only the Consumer Finance Protection Bureau (CPFB) knows for sure.  While settlement service providers can offer programs to educate real estate licensees about their services that is different from giving a gift, such as a free continuing education class, directly to a real estate licensee. When continuing education classes are mandatory as part of license renewal, real estate licensees normally pay to take them. If a settlement service provider offers a continuing education class for free, it could result in a violation of Section 8.

Are you aware of a possible RESPA violation? Contact the Consumer Finance Protection Bureau at or by phone at (855) 411-CFPB | (855) 411-2372.

Questions?  Please contact the Rhode Island Association of Realtors Legal Department at 401-432-6945 or email

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