A joint venture can put your business at risk if there’s even a hint of “steering” and a violation of the Real Estate Settlement Procedures Act (RESPA). How do you help ensure you’re in compliance? Ask yourself these five key questions:
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Does your joint venture comply with the U.S. Department of Housing and Urban Development’s Ten Factor Test? Compliance with all 10 factors is not a requirement, but a joint venture would be wise to comply with the guidelines.
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Is your joint venture set up as an independent third-party company with its own operating agreement in place?
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Does your joint venture maintain independent operations, staffed with its own employees and own office space, equipment, phone numbers and vendors?
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Do you disclose the relationship between the lender and joint venture to consumers, and ensure they know they have the right to do business with whomever they wish?
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Do you implement a customer satisfaction survey by a third party to immediately assess the consumer’s reactions, including whether they felt pressured to use the joint venture?
Strategic Compliance Partners (SCP) — a leader in mortgage compliance management —can help you create and maintain a secure and compliant mortgage joint venture compliance program. Our solution JVerify is a premier compliance management system specifically designed to meet the compliance challenges of real estate and mortgage joint ventures at start-up and throughout the life of the joint venture. It includes protocols designed to prevent unlawful steering; annual risk assessments; review of marketing and advertising materials to ensure compliance with applicable laws and regulations; and client surveys that provide general feedback and monitor RESPA compliance.
