California National University Ethical Issue in Real Estate Questions We are writing about: The ethics issue that I want to discuss is kickbacks and unearn

California National University Ethical Issue in Real Estate Questions We are writing about: The ethics issue that I want to discuss is kickbacks and unearned fees in Real Estate as a real estate agent.

I have attached a PDF that goes into detail about some of the things you can discuss.

Please use terms relating to this subject from this book and use it as a reference as well!! Thank you!!!:

Ferrell, Fraedrich and Ferrell (2018). Business Ethics: Ethical Decision Making and Cases (12th ed.). Mason,OH: Cengage Learning. ISBN: 978-1337670340

ASSIGNMENT DESCRIPTION:

Identify and analyze specific ethical problem in your current or past organization. Choose a different ethical problem from the one you chose for Mini-Paper #1. Pick a problem of manageable size. The nature of the ethical problem is up to you but make sure there is an ethical component to the problem since you will be analyzing it. Remember, this is an application exercise not a history lesson or presentation of abstract course material.

This is a mini-paper, which means it should be only 3-5 pages long (12 point Times New Roman, double-spaced). Brief does not mean superficial. You will have to think carefully to best use the concepts from the course to help you answer the questions. Make sure you consult the grading rubric as you prepare your mini-paper and prior to submission. The grading rubric will be used to grade your mini-paper.

In narrative form, address the following areas:

What is the nature of the ethical breakdown?
What about do you question ethically?
What about the situation do you find acceptable?
How common is this problem?
What guidance does the organization provide?
What action would you recommend?

APA guidelines are required. It is strongly suggested that you use these questions as sub-headings in your mini-paper to ensure you address each area and that the instructor can locate specific material expected to address each of the questions.

Some suggested resources to help with APA:

APA Guide – NU Library – 2010.pdf (PDF file, 126KB)
APA Template description.pdf (PDF file, 1.6MB)
APA template.docx (WORD file, 275KB) § 1024.14 Prohibition against kickbacks and unearned fees. | Consumer Financial Protection Bureau
5/26/20, 7:08 PM
Submit a Complaint (https://www.consumerfinance.gov/complaint/)
Subpart A – General
Provisions
§ 1024.1–§ 1024.5
Subpart B Mortgage
Settlement and
Escrow Accounts
§ 1024.6–§ 1024.20
§ 1024.6 Special
information booklet at
time of loan
application. (https://ww
w.consumerfinance.gov
/policy-compliance/rule
making/regulations/10
24/6/)
§ 1024.7 Good faith
estimate. (https://www.
consumerfinance.gov/
policy-compliance/rule
making/regulations/10
24/7/)
§ 1024.8 Use of HUD-1
or HUD-1A settlement
statements. (https://ww
w.consumerfinance.gov
/policy-compliance/rule
making/regulations/10
24/8/)
§ 1024.9 Reproduction
of settlement
statements. (https://ww
w.consumerfinance.gov
/policy-compliance/rule
making/regulations/10
24/9/)
§ 1024.10 One-day
advance inspection of
HUD-1 or HUD-1A
settlement statement;
delivery;
recordkeeping. (https://
www.consumerfinance.
§ 1024.14 Prohibition against kickbacks and
unearned fees.
THIS VERSION IS THE CURRENT REGULATION
Search this regulation (https://www.consumerfinance.gov/policy-compliance/rulemaking
/regulations/search-regulations/results/?regs=1024)
(a) Section 8 violation. Any violation of this section is a violation of section 8 of RESPA (12
U.S.C. 2607).
(b) No referral fees. No person shall give and no person shall accept any fee, kickback or
other thing of value pursuant to any agreement or understanding, oral or otherwise, that
business incident to or part of a settlement service involving a federally related mortgage
loan shall be referred to any person. Any referral of a settlement service is not a
compensable service, except as set forth in § 1024.14(g)(1). (https://www.consumerfinance.
gov/policy-compliance/rulemaking/regulations/1024/14/#g-1) A company may not pay any
other company or the employees of any other company for the referral of settlement service
business.
(c) No split of charges except for actual services performed. No person shall give and no
person shall accept any portion, split, or percentage of any charge made or received for the
rendering of a settlement service in connection with a transaction involving a federally
related mortgage loan other than for services actually performed. A charge by a person for
which no or nominal services are performed or for which duplicative fees are charged is an
unearned fee and violates this section. The source of the payment does not determine
whether or not a service is compensable. Nor may the prohibitions of this part be avoided
by creating an arrangement wherein the purchaser of services splits the fee.
(d) Thing of value. This term is broadly defined in section 3(2) of RESPA (12 U.S.C. 2602(2)).
It includes, without limitation, monies, things, discounts, salaries, commissions, fees,
duplicate payments of a charge, stock, dividends, distributions of partnership profits,
franchise royalties, credits representing monies that may be paid at a future date, the
opportunity to participate in a money-making program, retained or increased earnings,
increased equity in a parent or subsidiary entity, special bank deposits or accounts, special
or unusual banking terms, services of all types at special or free rates, sales or rentals at
special prices or rates, lease or rental payments based in whole or in part on the amount of
business referred, trips and payment of another person’s expenses, or reduction in credit
against an existing obligation. The term “payment” is used throughout §§ 1024.14 (https://w
ww.consumerfinance.gov/policy-compliance/rulemaking/regulations/1024/14/) and
1024.15 as synonymous with the giving or receiving of any “thing of value” and does not
require transfer of money.
(e) Agreement or understanding. An agreement or understanding for the referral of
business incident to or part of a settlement service need not be written or verbalized but
may be established by a practice, pattern or course of conduct. When a thing of value is
https://www.consumerfinance.gov/policy-compliance/rulemaking/regulations/1024/14/
Page 1 of 3
§ 1024.14 Prohibition against kickbacks and unearned fees. | Consumer Financial Protection Bureau
www.consumerfinance.
gov/policy-compliance/
rulemaking/regulations
/1024/10/)
Subpart C § 1024.11Servicing
Mailing. (htt
Mortgage
ps://www.consumerfina
§ 1024.30–
nce.gov/policy-complia
§ 1024.41
nce/rulemaking/regulat
ions/1024/11/)
Appendices
§ 1024.12 No fee. (http
s://www.consumerfinan
Supplement
I to
ce.gov/policy-complian
Part
1024
Official
ce/rulemaking/regulati
Interpretations
ons/1024/12/)
§ 1024.13 [Reserved] (h
ttps://www.consumerfin
ance.gov/policy-compli
ance/rulemaking/regul
ations/1024/13/)
§ 1024.14 Prohibition
against kickbacks and
unearned fees.
5/26/20, 7:08 PM
may be established by a practice, pattern or course of conduct. When a thing of value is
received repeatedly and is connected in any way with the volume or value of the business
referred, the receipt of the thing of value is evidence that it is made pursuant to an
agreement or understanding for the referral of business.
(f) Referral.
(1) A referral includes any oral or written action directed to a person which has the
effect of affirmatively influencing the selection by any person of a provider of a
settlement service or business incident to or part of a settlement service when such
person will pay for such settlement service or business incident thereto or pay a charge
attributable in whole or in part to such settlement service or business.
(2) A referral also occurs whenever a person paying for a settlement service or business
incident thereto is required to use (see § 1024.2, (https://www.consumerfinance.gov/po
licy-compliance/rulemaking/regulations/1024/2/) “required use”) a particular provider
of a settlement service or business incident thereto.
(g) Fees, salaries, compensation, or other payments.
(1) Section 8 of RESPA permits:
(i) A payment to an attorney at law for services actually rendered;
(ii) A payment by a title company to its duly appointed agent for services actually
performed in the issuance of a policy of title insurance;
§ 1024.15 Affiliated
business arrangements.
(https://www.consumer
finance.gov/policy-com
pliance/rulemaking/reg
ulations/1024/15/)
(iii) A payment by a lender to its duly appointed agent or contractor for services
actually performed in the origination, processing, or funding of a loan;
§ 1024.16 Title
companies. (https://ww
w.consumerfinance.gov
/policy-compliance/rule
making/regulations/10
24/16/)
(v) A payment pursuant to cooperative brokerage and referral arrangements or
agreements between real estate agents and real estate brokers. (The statutory
exemption restated in this paragraph refers only to fee divisions within real estate
brokerage arrangements when all parties are acting in a real estate brokerage
capacity, and has no applicability to any fee arrangements between real estate
brokers and mortgage brokers or between mortgage brokers.);
§ 1024.17 Escrow
accounts. (https://www.
consumerfinance.gov/
policy-compliance/rule
making/regulations/10
24/17/)
(vi) Normal promotional and educational activities that are not conditioned on the
referral of business and that do not involve the defraying of expenses that
otherwise would be incurred by persons in a position to refer settlement services
or business incident thereto; or
§§ 1024.18–1024.19
[Reserved] (https://ww
w.consumerfinance.gov
/policy-compliance/rule
making/regulations/10
24/19/)
§ 1024.20 List of
homeownership
counseling
organizations. (https://
www.consumerfinance.
gov/policy-compliance/
rulemaking/regulations
(iv) A payment to any person of a bona fide salary or compensation or other
payment for goods or facilities actually furnished or for services actually
performed;
(vii) An employer’s payment to its own employees for any referral activities.
(2) The Bureau may investigate high prices to see if they are the result of a referral fee
or a split of a fee. If the payment of a thing of value bears no reasonable relationship to
the market value of the goods or services provided, then the excess is not for services
or goods actually performed or provided. These facts may be used as evidence of a
violation of section 8 and may serve as a basis for a RESPA investigation. High prices
standing alone are not proof of a RESPA violation. The value of a referral (i.e., the value
of any additional business obtained thereby) is not to be taken into account in
determining whether the payment exceeds the reasonable value of such goods,
facilities or services. The fact that the transfer of the thing of value does not result in an
increase in any charge made by the person giving the thing of value is irrelevant in
determining whether the act is prohibited.
https://www.consumerfinance.gov/policy-compliance/rulemaking/regulations/1024/14/
Page 2 of 3
§ 1024.14 Prohibition against kickbacks and unearned fees. | Consumer Financial Protection Bureau
5/26/20, 7:08 PM
(3) Multiple services. When a person in a position to refer settlement service business,
such as an attorney, mortgage lender, real estate broker or agent, or developer or
builder, receives a payment for providing additional settlement services as part of a real
estate transaction, such payment must be for services that are actual, necessary and
distinct from the primary services provided by such person. For example, for an
attorney of the buyer or seller to receive compensation as a title agent, the attorney
must perform core title agent services (for which liability arises) separate from attorney
services, including the evaluation of the title search to determine the insurability of the
title, the clearance of underwriting objections, the actual issuance of the policy or
policies on behalf of the title insurance company, and, where customary, issuance of the
title commitment, and the conducting of the title search and closing.
(h) Recordkeeping. Any documents provided pursuant to this section shall be retained for
five (5) years from the date of execution.
(i) Appendix B of this part. Illustrations in appendix B of this part demonstrate some of the
requirements of this section.
Previous section – § 1024.13 (https://ww
w.consumerfinance.gov/policy-complia
nce/rulemaking/regulations/1024/13/)
§ 1024.13 [Reserved]
Next section – § 1024.15 (https://www.c
onsumerfinance.gov/policy-compliance
/rulemaking/regulations/1024/15/)
§ 1024.15 Affiliated business
arrangements.
An official website of the United States government
https://www.consumerfinance.gov/policy-compliance/rulemaking/regulations/1024/14/
Page 3 of 3

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