Commission Express

With New RESPA Regulations, Real Estate Brokers Turn to Commission Express for Working Capital

Updated Real Estate Settlement Procedures Act regulations went into effect on October 3, and real estate brokers can no longer receive commissions for settlement service referrals on transactions involving federally regulated loans. Many brokers who previously relied on these kickbacks to fund their daily business expenses are turning to Commission Express, which provides a legal source of working capital to help real estate brokers manage their cash flow.


Fairfax, VA -- (ReleaseWire) -- 11/11/2015 --On October 3, new Real Estate Settlement Procedures Act (RESPA) regulations went into effect. The updated legislation prohibits real estate brokers from receiving commissions for referring people to other businesses. In most cases, brokers cannot receive any commission. Brokers who have relied on these payments to fund their daily business operations must now find a new source of working capital. Many are turning to Commission Express, which provides brokers with advances on real estate commissions that they can legally use to help their cash flow.

RESPA has been around for decades, since 1974. The new regulations that went into effect on October 3 make the act's laws stricter. The Consumer Financial Protection Bureau (CFPB) published a bulletin that summarizes the updated regulations: "Any agreement that entails exchanging a thing of value for referrals of settlement service business involving a federally related mortgage loan likely violates RESPA." The bulletin goes on to say that agreements like these are illegal even if a marketing service agreement (MSA) is in place.

Although commissions on referrals rarely account for a large portion of a real estate broker's income, they are an important component of many brokers' budgets. They may only be a few hundred dollars or less, but payments from referrals often come before commissions on real estate transactions themselves are actually paid. Many brokers have used these smaller but sooner referral commissions to pay their daily operating expenses between larger transaction commissions -- especially in months when the market is slower and real estate transaction commissions come less frequently.

Since brokers can no longer rely on these payments to fund their daily business expenses, many are looking for new, legal cash infusions. One company they are turning to is Commission Express. Commission Express gives brokers an advance on their real estate commissions. Although the company charges a nominal factoring fee, many brokers are happy to pay this fee to get their commission early. Often, real estate brokers can get commissions that otherwise would not be paid for 30, 60 or even 90 days in as little as two business days.

The new RESPA regulations have only been in effect for a short while, but the company is already seeing interest from new real estate brokers. As one representative with the company explains, "The real estate market is always changing, and brokers must continually adapt to the new changes. Commission Express is glad it can help brokers adjust to these new changes and continue to manage their cash flow." Real estate brokers, likewise, are glad they can still get advances on their commissions from transactions.

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