Mortgage loan originators navigating referral relationships, marketing partnerships, and day-to-day deal flow received a clear warning during a MaxClass webinar held March 19: many common business practices still fall into dangerous gray areas under RESPA Section 8.
The 45-minute session, titled “A Date With Section 8 — What You Can and Can’t Pay For,” was part of MaxClass’ “Maximum Compliance” training series and focused on helping LOs understand how routine activities, from co-marketing to office space arrangements, can trigger compliance risk if not properly structured.
MaxClass CEO LaDonna Lockard, who hosted the session, said the goal was to translate regulatory language into practical guidance that loan officers can actually use in the field.
“Section 8 is decades old, but it’s still widely misunderstood in the field,” Lockard said. “There’s a gap between what the regulation says and how people actually apply it in real life.”
She added that many originators struggle not because they intend to violate the rules, but because of persistent confusion around core concepts.
“A lot of the confusion comes down to what really counts as a ‘thing of value,’” Lockard said.
Breaking down the rules
Jeana Lanktree, director of training and compliance at MaxClass, said that confusion persists despite years of enforcement.
“Section 8 has been around for 50 years, and yet we’re still talking about it,” Lanktree said. “That tells you how poorly the industry has historically navigated these rules.”
She said much of that confusion stems from vague language in the regulation itself.
“The term in the regulation is vague. They’re talking about concepts like items of value and agreements that are very broad and open to interpretation,” Lanktree said. “The more room there is for interpretation, the more likely those rules are to be misconstrued and misapplied.”
Lanktree broke Section 8 into three core components, starting with referral-based compensation.
“Section 8(a) is really about incentives—kickbacks and referrals,” she said. “Are you paying to play? Are you paying someone to send you business, or are you taking anything of value in return for that business?”
She added that Section 8(b) addresses unearned compensation.
“Section 8(b) looks at unearned fees and split fees—when someone gets paid on a file but didn’t actually do the work, or the split is disproportionate to the work performed,” Lanktree said.
Section 8(c), she noted, provides the framework for compliant structures.
“Section 8(c) is essentially your safe harbor,” she said. “It’s where you look when you’re considering an agreement or under review, and you want to know: what structure will actually keep us safe?”
Where LOs get into trouble
The webinar zeroed in on everyday scenarios that can create exposure for loan officers, particularly around what regulators define as a “thing of value.”
Office space arrangements were a recurring issue.
“In a lot of cases, the rent being paid was completely out of line with fair market value for that area,” Lanktree said. “That difference — that inflated rent — is considered a thing of value.”
Co-branded marketing, often used by LOs to build referral relationships, can also create risk.
“Co-branded marketing sounds harmless, but it often isn’t,” she said. “If one party is paying more than their fair share, that can become a violation.”
Lockard noted that many of these practices stem from competitive pressure within the industry.
“People are trying to figure out how to build relationships and compete, especially when they think others may be doing things that cross the line,” she said.
Inclusivity vs. exclusivity
A key takeaway for loan originators was how they structure events, marketing and outreach.
“The easiest way to think about staying compliant is inclusivity,” Lanktree said. “If you’re sponsoring an event or paying for CE, it can’t be individualized. Invite the entire office—that’s how you keep yourself safe.”
Targeting top referral partners, she warned, can signal an improper arrangement.
“Is there an expectation of referrals? That’s the question,” she said. “It crosses the line when there’s a clear ‘you do this for me, I do that for you’ built into the structure.”
Enforcement is getting smarter
Lanktree said enforcement is increasingly driven by data and pattern recognition, a shift that should concern originators who assume informal arrangements won’t be detected.
“People think, ‘CFPB is restructuring, so maybe it’s the wild west again,’” she said. “The reality is the opposite. It has never been easier to compile data, analyze patterns, and see exactly who is doing business with whom.”
“The regulation says an agreement doesn’t have to be written or even spoken,” she added. “It can be established purely by a pattern of conduct.”
Myths that can cost you
The webinar also addressed common misconceptions circulating among LOs, including the so-called “$25 rule.”
“There is no actual rule that says ‘anything under $25 is fine,’” Lanktree said. “That’s an industry myth.”
She said regulators are less concerned with one-off gestures and more focused on patterns tied to referral activity.
The cost of getting it wrong
Violations of Section 8 can carry significant penalties.
“You can incur about a $10,000 penalty per violation,” Lanktree said. “On top of that, you can face license restrictions, license loss, and in some cases criminal exposure.”
Competing without “buying” business
Lockard said the session ultimately aimed to reframe how originators think about growth.
“You don’t need to buy business to be successful,” she said.
Lanktree echoed that message, emphasizing long-term sustainability over short-term incentives.
“You don’t have to be the ‘sugar daddy’ lender to be successful,” she said. “You can decide that your value is on-time closings, superior service, and clean files—and you can build very strong businesses on that.”
