What are the penalties for paying or accepting an illegal referral fee?

Accepting or paying an illegal referral fee is a violation under federal mortgage-related laws, particularly the Real Estate Settlement Procedures Act (RESPA). The penalties for engaging in this prohibited practice are designed to deter unlawful behavior that harms consumers and the integrity of the mortgage market.

In this case, fines can reach up to $10,000, and individuals may face imprisonment for up to three years. This aligns with the law's intention to impose significant consequences on those who violate its provisions, thereby reinforcing the importance of compliance in real estate transactions.

The severity of the penalties highlights the seriousness with which illegal referral fees are treated. The potential for longer prison terms serves as an additional deterrent, signaling that the practice is not only unethical but also subject to strict enforcement. This serves to protect consumers from unnecessary costs associated with referral arrangements not disclosed or sanctioned by the law.