Short answer: in a home loan covered by federal settlement rules, no one may give or accept a fee, kickback or other thing of value for referring settlement service business, and no one may take a share of a settlement charge for work they did not actually perform. A referral to a business the referring person has an ownership link with can be allowed, but only with a written disclosure, no requirement that you use that business, and no payment beyond a return on ownership. This page covers federal law only; other rules may apply where you live. It is general information, not legal or financial advice.
What the law bans
No person may give or accept any fee, kickback or thing of value under any agreement or understanding, oral or otherwise, that business incident to or part of a real estate settlement service involving a federally related mortgage loan will be referred to any person (12 U.S.C. 2607(a), LII, read October 30, 2026). No person may give or accept any portion, split or percentage of a settlement charge other than for services actually performed (2607(b)). Regulation X repeats these rules and adds detail (12 CFR 1024.14(b)-(c), eCFR, text up to date as of October 28, 2026, read October 30, 2026).
| Term | What Regulation X says | Section |
|---|---|---|
| Thing of value | Broadly defined: money, discounts, commissions, stock, dividends, trips, payment of another person’s expenses, services at special or free rates, rent based on business referred, and more; no transfer of money is needed | 1024.14(d) |
| Agreement or understanding | Need not be written or spoken; it can be shown by a practice, pattern or course of conduct, and a thing of value received again and again that is tied to the volume or value of referrals is evidence of one | 1024.14(e) |
| Referral | Any oral or written action that affirmatively influences your choice of a settlement service provider when you pay for the service, and also being required to use a particular provider | 1024.14(f) |
| Unearned fee | A charge for which no or nominal services are performed, or a duplicative fee | 1024.14(c) |
What is allowed
The law and Regulation X allow, among others (2607(c); 1024.14(g)(1)):
- Payment to an attorney for services actually rendered.
- Payment by a title company to its appointed agent, or by a lender to its appointed agent or contractor, for services actually performed.
- A bona fide salary or other payment for goods or facilities actually furnished or services actually performed.
- Fee splits between real estate agents and brokers acting as real estate brokers (not between real estate brokers and mortgage brokers).
- Normal promotional and educational activities that are not conditioned on referrals and do not pay expenses the referrer would otherwise have.
- An employer’s payment to its own employees for referral activities.
If a payment bears no reasonable relationship to the market value of the goods or services, the excess is not for services actually performed. High prices alone are not proof of a violation (1024.14(g)(2)).
Affiliated business arrangements
A referral to a settlement service provider that the referring person has an ownership or other affiliate link with is allowed only if all three conditions are met (2607(c)(4); 12 CFR 1024.15(b), eCFR):
| Condition | Section |
|---|---|
| You get a written disclosure of the relationship and an estimated charge or range of charges of the provider, on a separate piece of paper, in the format in Appendix D | 1024.15(b)(1) |
| You are not required to use that provider (a lender may still require its own choice of attorney, credit reporting agency or appraiser to represent the lender’s interest) | 1024.15(b)(2) |
| The only thing of value received from the arrangement, other than allowed payments, is a return on an ownership interest or franchise relationship, not one that varies with referrals | 1024.15(b)(3) |
The disclosure is due at or before a face-to-face, written or electronic referral, within three business days after a phone referral, and for a lender’s referral when the lender gives its estimate of settlement costs (2607(c)(4)(A)). The model form in Appendix D says the referral may give the referring party a financial or other benefit, that you are NOT required to use the listed provider, and that you are free to shop around.
For title insurance, a seller also may not require you to use a particular title company; see title insurance basics. For how loan originators may be paid, see mortgage broker compensation rules.
Liability and time limit
Anyone who breaks these rules is jointly and severally liable to the person charged for the settlement service for three times the amount of any charge paid for that service (2607(d)(2)), and the law also sets a fine of up to $10,000, prison of up to one year, or both (2607(d)(1)). A private action must be brought within one year from the date of the violation (12 U.S.C. 2614, LII).
This example is only for the math, with an example charge and dates.
| Item | Example |
|---|---|
| Charge paid for the settlement service | $800 |
| Three times the charge: 3 × $800 | $2,400 |
| Date of the violation | March 3, 2027 |
| One year later | March 3, 2028 |
For your own case and deadlines, ask a lawyer; you can look for legal aid through the Legal Services Corporation. You can submit a complaint at consumerfinance.gov/complaint; see how to file a loan complaint.
Questions to ask if you feel steered
- Do you have an ownership or other business relationship with the provider you are recommending?
- Will you get any payment, discount or other benefit if I use them?
- Am I required to use this provider, or may I choose my own?
- What is their estimated charge, and can I see the written disclosure?
Checklist
- Ask for the affiliated business arrangement disclosure when someone refers you to a related business.
- Compare at least one other provider before you agree to a referral.
- Keep every disclosure, estimate and email about referrals.
- Note the one-year time limit for a private action.
- Talk to a lawyer about your own case.
Start your loan request How our service works
Sources
- Cornell LII: 12 U.S. Code 2607, Prohibition against kickbacks and unearned fees
- eCFR: 12 CFR 1024.14, Prohibition against kickbacks and unearned fees (Regulation X), current text up to date as of October 28, 2026
- eCFR: 12 CFR 1024.15, Affiliated business arrangements (Regulation X), current text up to date as of October 28, 2026
- eCFR: Appendix D to Part 1024, Affiliated Business Arrangement Disclosure Statement Format (Regulation X), current text up to date as of October 28, 2026
- Cornell LII: 12 U.S. Code 2614, Jurisdiction of courts; limitations
- CFPB: Submit a complaint
- Legal Services Corporation: Find legal aid
Disclosure: Modern Lending Solutions is not a lender, loan broker or agent for any lender or loan broker, and does not make credit decisions. Any compensation we receive is paid by participating lenders, only for advertising services. This guide is general information, not financial or legal advice.