If you originate mortgages, insurance is a natural adjacent topic — borrowers need homeowners coverage to close, and you're right there at the moment it matters. But the moment a referral touches a federally related mortgage, a second rulebook opens: the Real Estate Settlement Procedures Act (RESPA). RESPA is stricter than general state referral rules, and getting it wrong carries real penalties. This is a plain-English overview and it is educational, not legal advice — confirm your specific arrangement with qualified counsel and your state Department of Insurance (DOI).
What is RESPA and why does it apply to loan officers?
RESPA is a federal law governing settlement services for residential real estate — the services involved in closing a mortgage loan. Loan origination is a settlement service, which puts loan officers squarely inside RESPA's reach whenever a referral connects to a federally related mortgage transaction.
The key piece for referrals is Section 8. In plain terms, Section 8 prohibits giving or receiving any "thing of value" in exchange for referring settlement-service business. It targets kickbacks and referral fees that could inflate the cost of closing or steer borrowers based on payments rather than their interests.
Whether homeowners insurance is itself a "settlement service" can depend on the facts, but the safer assumption for a loan officer is this: , not just a state-law one.