L&F CEO Emails Agents Not Using Partners. Too far?

I rarely write commentary about news articles but this one stood out.

I was intrigued by Dina ElBoghdady‘s exposé today: Realtor Discourages Use of Outside Lenders, Long & Foster Pushes Own Mortgages, where she questions an email sent by Mr. Foster to all Long & Foster agents.

She wrote, “[The email] chastised his workers for funding mortgages through Bank of America more than 2,200 times last year [vs using L&F owned Prosperity Mortgage].”

Flashback/Prognostication (wow that really is a word!), I wrote about this topic months ago with my “Affiliated Business” or Illegal Kickbacks? post.

RESPA is a rule that bans kickbacks in real estate transactions. However some companies have gone the technicality route and found ways to comply with the law, but perhaps not with the intent.

While using an “affiliated partner” should not result in money being put directly in an agent’s pockets (Remax found a way to give partial ownership in title companies to Remax agents), how is that different than what Foster said when he says he “wrote the memo to make agents understand that each time they use Prosperity, they’re helping Long & Foster, which in turn enables the company to provide better resources and more advertising for agents.

Let me break it down:

“Illegal” as per RESPA:

  1. Agents tell customers to use partner.
  2. Agents receive a cash kickback or profit sharing.


  1. Agents tell company to use partner.
  2. Company receives benefit.
  3. Company gives agent more advertising (indirect benefit).

Um… Ok, got it!

Now there is nothing wrong with having reliable partners (lenders, title companies etc.). And Wes Foster even had a great marketing program that offered $5,000 in mortgage payments if a deal went sour with their lender. As an agent, you don’t want your client using some web bank that has no loyalty to the customer, or agent. Somebody that won’t care if they pull the rug out from under you at the last second. Instead you want accountable partners with track records for getting the deal done.

But there is a fine line from a recommendation from an agent receiving ANY benefit, direct or indirect from that referral. And even if the client signs 37 disclaimers saying they are being referred to a partner.

I have loan partners. I don’t allow them to give me kickbacks (direct or indirect) beyond a $10 sandwich (trust me, I could get free lunches for a year if I wanted to let any lender take me to lunch).

Also I know a top producing agent at Weichert that isn’t allowed to say that she is #1 in the office since she doesn’t use the partnering lender or title companies. While this isn’t a monetary incentive (kickback), it is similar in that it is a penalty for not funneling deals to their partners.

Why this is important for buyers:

You need to know who is recommending what, and what benefits that person is getting. Otherwise abuse in the system can lead to price gouging. There is currently a case against Coldwell Banker where even though their agents got disclaimers signed, the suit questions whether the agent acted in their fidiciary duty and routed clients to overpriced partners.

Have you experienced pressure from your broker to use “partners?”

If you are reading this post via an RSS reader or via email, make sure to come back to Blog.FranklyRealty.com to read the 20+ comments and debate. (not signed up yet? Join in the upper right of the blog.)

– Written by Frank Borges LL0SA- Broker FranklyRealty.com

(please report typos)

  • 6
  • November
  • 2007

48 Responses to “L&F CEO Emails Agents Not Using Partners. Too far?”

  1. Andrew J. Lenza, ABR GRI MBA says:

    Frank, Exceptionally written. You’ve succinctly explained the RESPA pitfalls to these arrangements. Well done. This was a worthy read!

  2. Cindy Jones Fairfax County Real Estate says:

    They also have raised your favorite “transaction fee” too :-) The Prosperity Loan Officers get extra credit if they get agents outside of Long & Foster to use their services. I happen to have a Prosperity Loan person that I like and is on my referral list but he isn’t the only loan officer I recommend. Have you seen the new L&F office on Route 28? Someone has to pay for it!

    Cindy Jones (formerly with L&F)

  3. Catherine Read says:

    I think Andrew has a valid point that there are pitfalls to these arrangements which is why they are so closely regulated. But I think many fail to see that Long & Foster is a big company that has diversified it’s business interests just like GE has. Real Estate is the primary service offered by the company, but branching out to mortgage and insurance to offer additional services to the same consumer is hardly suspect. Lots of real estate companies have folded and gone out of business in the course of the last 40 years. Long & Foster grew and still grows. Where does everyone think the profit from these companies is going? Love your blog Frank!!

  4. Missy Caulk- Ann Arbor Real Estate says:

    I am with Remax in Ann Arbor, we do have strategic partnerships with a lender, Chase. Never use them. A title company, nope don’t use them either. It is a option, not a requirement and I chose to work with my wonderful lenders and title companies and I get nothing in return…………….except exceptional service.

    There is a large company in town and if they do the loan and and use the title company in-house, the agent does not have to pay the 8% transaction fee. What does that say ?? That’s a ton of money that agent will save in a year so you bettcha some do it.

    Keep it up Frank, agents need to be aware of the this.

  5. Tchaka Owen says:

    Frank, I just wrote Dina thanking her for writing this article and mentioned you because we had this discussion here on AR about 4 or 5 months ago when you wrote a blog on it. I do agree with Andrew that you wrote a concise article explaining (without typos). I now know what is “illegal” and what is “um-legal”. Kinda like that ad with um-limited minutes.

  6. Jonathan Osman - Charlotte / Matthews NC says:

    Good to see a post about Long and Foster.
    Selling in Maryland for many years before making the move south, I had a lot of dealing with L&F agents and prosperiety mortgage, insurance, and title. Its absolutely wrong for a company to chastise their workers for not funnelling buyers into their mortgage coffers – regardless of RESPA. My goal, first and foremost, was to help the client get the best program for them at the best rate and the lowest closing…whomever that was at the time. So an agent that’s tops gets blackballed for being a great agent.

    That, right there, is what’s wrong with the real estate industry. Great post!

  7. Patricia Kennedy says:

    Frank, great post! I’m in total agreement that you need to give your clients options for financing. And pushing an in house lender doesn’t cut it.

  8. Tom Burris | Texas Home Loans says:

    I have had a lot of conversations with ‘out of town realtors’ and I am certain that the problems with out of town lenders can be avoided by realtors who understand lending.

    Get educated. Sit with your lenders. Learn the questions to ask!!!!

  9. Anonymous says:

    I have to post this anonymously because we have several agents on AR.

    We have an in-house loan company. At least that’s what I’m told. If an agent takes a call that results from a company listing it is strongly recommended (you must) use the in-house lender. Something about the cost of advertising…yada yada ya! Maybe I am missing something but I think this is sooooo wrong.

  10. Anonymous says:

    I heard the other day for a 20+ year Long and Foster vet that Wes Foster will start lending his own money soon… or in other words… he bought a bank…

  11. Cris Burlew, Broker ~ St Pete Beach FL Real Estate says:

    I used an in-house lender ONCE when I first started with a franchise company. I then built relationships with other lenders and have been better for it.

    I left and went to work for another franchise company whose broker insisted on us using a particular title company. I told her that as a listing agent, I already had a title company that I used which is where my deals would go. I also told her that I had a bad experience on a prior deal with her title company. She didn’t argue with me, since she saw the listings coming in the door.

    When we opened as an independent company, we chose to not have in-house mortgage, title, etc. We leave it up to our agents as to who they want to use. I feel the consumer is better off by being able to choose who they want to work with.

    Great post and thanks for the information.

  12. John MacArthur says:

    Frank – Ok, well I don’t see it the same way. I wrote the author a note

    Ms. ElBoghdady, I just finished reading your article regarding the internal e-mail that Mr. Foster sent to all agents. I certainly understand your fervor to garner yet another by line but feel you have done a rather blatant hatchet job.

    I am an agent and my broker is Long and Foster. In the last three years, I have referred buyers to the Prosperity Lender. At no time did I ever require someone to use that lender. It was a starting point. Three and four years ago, the lender of choice usually was the lender that returned your call on a Saturday or Sunday morning while you stood outside an “open house” with a potential buyer. Usually, you were part of a crowd of potential buyers, each hoping to have the necessary documentation needed to present an offer right away. The initial approval letter was needed to submit an offer. It did not lock the borrower into that lender. The same is true today. Having a buyer speak with a lender and determine what size and type of loan they are qualified for and are comfortable with is not by any means the final determination of whom will write the loan.

    Prosperity has made every effort to make loan officers available when they are needed. The free market has many lenders. Your paper, other newspapers, the internet, television and radio all herald the availability of lenders.

    When recommending a lender, an agent can only share information based on their personal knowledge and it should only be presented as a starting point.

    The referral system that you paint as such an onerous event usually has more to do with the relationship that the agent has with the individual than any relationship that may exist between the broker and the actual lender.

    You did quote the cowardly, crawl from beneath a rock agent in your article.

    “”I’m thinking that some agents will feel psychic pressure to use only Prosperity Mortgage,” the agent said. “I’m supposed to give my clients the best service, and that means helping them find the best loan.”
    I certainly hope that after she shared this bit of misguided self importance, you mentioned that her fiduciary responsibility clearly is in contrast to her thoughts on what her “best service” means. Unless she is a qualified loan originator, she has no clue as to what “the best loan” may be. There are many factors that go into a loan and many of them deal with areas that are outside the qualified knowledge base of any real estate agent.

    In Maryland, as well as other jurisdictions across the country, clients receive a disclosure that outlines “Who the agent represents”. That document clearly states that an agent is only qualified to represent you on real estate matters only. In Maryland, the “Exclusive right to represent buyer agreement” is more specific in stating “The Buyer acknowledges that the Broker is being retained solely as a real estate agent and is not an attorney, tax advisor,lender, appraiser, surveyor, structural engineer, home inspector or other professional service provider.”

    Your anonymous source obviously has a misguided sense of her responsibility to her clients. She opens herself up to the scrutiny that she claims Mr. Foster’s email causes.

    The importance of referring a client to one lender as a starting point for their goal of obtaining a loan should not be overlooked. The criteria has to begin with a confindence that the lender recommended has a track record of actually having their loans close on time. It is a wonderfully free market and rates do flucuate from one lender to another. The lender with the best rate at 9 in the morning may not have the best rate at 4 in the afternoon. Rate is the most misunderstood part of the equation. Only lenders truly understand the value of the rate in any program.

    It is a real estate agents job to make sure that their client has been directed to a firm that will guarantee a successful closing. I am like most other agents. It is my interest to recommend a firm that has that track record.

    I understand Mr. Foster’s email and took no offense. I do find your articles slant offensive and feel that your source might want to re-examine her personal ethics and professional job description.

    So many want to rush to judgement on a perceived wrong. Even in this thread, there are agents that are presumptious enough to think it is there job to secure the best loan. I can not even conceive of what world they think they are operating in. They may be the same agents that let their clients know which is the best house or best deal. We have an entire generation of agents that somehow have lost the distinction between advice and personal opinion. Agents do not pick homes to buy or offers to accept or loans to finance. It is outside even the loosest description of fiduciary responsibility. Our job is to ASSIST and ADVISE. That means making sure that a client understands the terms of a loan. This is done when you sit with the client and the lender. It won’t happen if you give them a number and tell them to call. It means making sure that a buyer understands all the terms and contingencies in their offer. It means making sure that they understand the importance of choosing a lender that will fund by the date of closing and explaining to them the questions they need answered. It means doing due dilegence on every offer and reporting to your client the likelihood of each offer actually reaching settlement.

    We are not empowered to make decisions for our clients. They come to us for help, not for us to play out yet another ego gratifying power trip.

  13. Elizabeth Nieves - Bilingual NC Real Estate Team says:

    Interesting! ::she says sarcastically:: Can you say ‘semantics’?? ;-)

  14. Renee Burrows - Las Vegas NV Real Estate says:

    Hi Frank! Yes I did from my former broker. I didn’t get any google juice or advertising for it, only he profited directly from that relationship.

    I don’t care to go down that slippery slope. I have my favorite mortgage lenders and title companies and I expect or will accept NOTHING in return other than they should take good care of my clients.

    I live a simple existence that way :wink:

  15. Bob & Carolin Benjamin - E Phoenix Valley Real Estate says:

    Interesting post. Thanks for sharing.

  16. Tchaka Owen says:

    John – are you getting a kickback from Prosperity or Long & Foster to write that response?

    I’m trying to be balanced here but I can’t think of any other reason why you’d write that unless perhaps there’s a misunderstanding on your part. The issue at hand is finding the best lenders based on your experience and provide those selections to your clients. If your experience with Prosperity has been good, then by all means recommend them as one of your lenders. But that’s a totally different situation than being ‘encouraged’ to use Prosperity. I know there are L&F agents who can’t stand Prosperity (from conversations I’ve had), others are indifferent about Prosperity. Why should they recommend them? What if Foster’s next move is to recommend a title company which is one you’ve had bad experiences with? That’s a hypothetical question but put yourself in that situation. Moreover, your suggestion that some agents think it’s their job to secure the best loan is probably a good blogging topic for you to write, but it has no bearing on this article. The issue at hand is finding the best lenders – that means service.

    The author’s article was right on. You just happen to like Prosperity…..that’s fine, but it’s clear that many agents from your own brokerage do not share the same experience as you.

  17. FRANK LL0SA Va Broker- BLOG.FranklyRealty.com says:


    Thank you for your detailed and passionate reply.

    I agree with much of it actually. And I don’t agree with many of the posts that are blasting Long & Foster.

    I agree with the notion of having a reliable partner that can get the deal done. No problem, we were both in-line with that one (I actually DISAGREE WITH THE THREE “Give 3 lender rule.” NO! Don’t give them three random names and a phone, give them reliable people that can close. If that is one person, fine. Just don’t get a cut at the same time.

    Where we diverge in our opinions is about where the compensation flows. When an agent benefits, either directly or indirectly from that referral, that is where it becomes suspect and POSSIBLY (not always) in the best interest of the client.

    How much does Prosperity make on that deal? $200? $1,000? If L&F didn’t take their cut, either

    1. The lender would make more or…
    2. The consumer would save more.

    That is why the RESPA law was created, to make sure real estate companies didn’t use their power and client trust to funnel them to a lender that lines there pockets with an extra $1,000.

    Now if Prosperity Mortgage was a partnership that cut out the marketing expenses for loan officers (ie they don’t have to advertise, but just take deals directly from L&F agents) and as a result ALL the savings were passed to the consumer, that I would see as a great example of packaged services and a consumer value add. But when you grab $100 or $1,000 from the deal, one has to wonder if that $1,000 could have been saved by going to another lender.

    And to call real estate a “loss leader” wow.

    Maybe I’m just jealous and wish I had their “losses.”


  18. John MacArthur says:

    Tchaka – I should have expected a mature response such as that. I didn’t realize that the author needed a ghost commenter to defend his position. I don’t receive kickbacks from anyone. I don’t use any of the Prestige Partners. I personally feel that the blog was another weak attempt from a small broker to take an unwarranted shot at his largest competitor.

    To compare the inference that if Long and Foster increases their profit, agents will have better work stations is akin to kickbacks and other RESPA violations belongs in the same lucid fact finding that put our troops in Iraq.

    If you are saying the impetus of this blog or the article was finding the best lenders, I disagree. The thrust of the article and this blog is that Long and Foster is skirting the rules or pressuring agents to do something tawdry.

    It was mentioned that some lenders refer business back to agents, yet the focus was not on that practice. I am sorry that you feel you could read so much about my personal practice from my comment. I only shared a portion of what I feel is misguided about the article, some of those interviewed and the thrust of this post.

    For the record, Mr. Foster can recommend to his hearts content, I am a self employed contractor and will conduct my business in the fashion that I see fit.

  19. FRANK LL0SA Va Broker- BLOG.FranklyRealty.com says:

    Hello again John,

    Thank you again for posted the other side of the story. I love getting as many viewpoints as possible. I think we might agree that the consumer should be informed, and by reading all viewpoints, they will be empowered to make the best choice for themselves.


  20. FRANK LL0SA Va Broker- BLOG.FranklyRealty.com says:

    Also John,

    I don’t believe that I attacked L&F. I’m just outlining what they are doing.

    If you feel that RESPA is a waste, then I encourage you to blog about it. I would love to see you defend RESPA and defend how L&F handles their partnerships, all in the same blog post.

    As for a small broker taking an “unwarranted shot at his largest competitor” I have nothing personal against L&F. Actually I have probably taught more L&F agents (my competition) how to set up a blog than L&F corporate (including free classes in L&F offices).

    We are a community. Actions made by one will reflect on all of our reputations.

    This email was sent to me by a closing company that received it from L&F agents. The uproar is from within.


  21. Jim Duncan says:

    There are too many similarities on the surface between what Long and Foster is apparently doing and what is referenced here –

    ““A lot of these big builders came in, putting all these houses up by the massive numbers that they needed to sell. They were actually taking their lenders and putting people in homes that should have never been put in one – ever,” she said.””


    There are too many potential liabilities and opportunities for buyers to doubt “their” Realtors’ loyalty and trust in situations where a Realtor benefits from something other than representing their clients’ best interests.

    Great post.

  22. Tchaka Owen says:

    I’ll move forward anyway.

    Frank – do you consider Foster, Jr. to be your largest competitor? I’m very curious because you’ve now been put on the spot.

    John – no one is saying the impetus of the article is to find the best lender, rather that it is that the CEO of Long & Foster did something that apparently skirts the rules.

    1. All of Long & Foster did not get called out, ie, all the agents are being accused of wrong-doing. Perhaps you’re taking it personally.

    2. Given that agents have a responsibility to provide good trustworthy lenders upon being asked by their clients, they have to be sure that they are confident with performance. That is NOT the impetus of the article, however it is factor that must be considered. Yes, I will split hairs.

    Indeed Foster, Jr. can recommend to his heart’s content and you may conduct your business as you see fit. As long as you’re both within the law.

  23. Cynthia Tilghman, Realtor® Onslow County NC Home says:

    Hi Frank,
    Good job and post. Personally, I like to give my clients the names of 3 lenders and let them choose. If they ask which I recommend of the 3, I’ll tell them.

  24. Nancy Pav says:

    As I Long & Foster agent I don’t feel that I am pressure to use any of our partners. I use Prosperity Mortgage, RGS Title and MBH because they do an excellent job. And I speak of the ones that I use. If they didn’t get the job done, I wouldn’t use them. We all have our preferred partners. I can’t tell you how many times I’ve had a house in Ashburn where the buyer’s agent wanted to use a title company in Annandale….is that in their client’s best interest?

    And what’s wrong with asking agents to support the in house lender? I didn’t read anywhere that we’d get fired if we didn’t use them or that commission splits would change if we didn’t use them.

    When clients I work with buy or sell a home, they are given a copy of the “Affiliated Business” form. It discloses fee ranges and states that Long & Foster receives money for any of these affiliates they use. I go on to further state that I do not make anything if they use these partners, only if the transaction closes. In other words, if I do my job…help them with the right service providers….then and only then I get paid. Isn’t that what I’m supposed to do?

    When did real estate companies become non-profit? Why, when we make money do we think that it’s wrong if the company makes money????

    And finally, I think that the Washington Post has cut their proofreaders and or editors. Long & Foster is the largest privately owned real estate company, not mortgage company.

  25. Debbie Cook says:

    I am an agent with Long and Foster. I got the email you are talking about – I did not feel “CHASTISED” (too strong a word for what’s in that email)

    I don’t work with a lot of buyers and I have only “occasionally” used Prosperity. The few times I have used Prosperity, they have been excellent. The other 99% of the time I use Chad Loube with FNMC and don’t ever feel “chastised” by Long and Foster.

    I just don’t see anything wrong with Mr Foster encouraging us to use Prosperity.

  26. Nancy Pav says:

    And if we are going to discuss improprieties…how about new homes builders who give huge incentives that are tied to the use of their lender. And I mean tied! And then when you visit the lender, their rates are not competitive and they have tons of junk fees. Did you know that many new homes contracts require the purchaser to pay for the grantors tax? What’s up with that??

  27. Debbie Summers says:

    Frank – I used to work for a Brokerage in FL that had a mortgage and title company that we were encouraged to use. The closings were “difficult” with the mortgage company and after a few bad experiences for customers I quit using them. I know that others who continued to use them were considered “team players” and given opportunities that I wasn’t. I left. I recommend a mortgage broker that doesn’t wine and dine me (at my request), but provides the best service to my customers.

  28. Diane Cipa says:

    Has anybody posted a copy of the e-mail?

  29. John MacArthur says:

    Frank and apparently Tchaka – Thanks for responding. I do not agree with everything Mr. Foster decides to do. I do not think he is always right. This entire discussion if being framed in different manners. I will gladly share the few, and note, I did say few areas of disagreement or areas of a different view point.

    Frank – The tone of your intial post (to me, I do not speak for the thousands of other readers of this forum), was disrespectful. It may be a small point, but it seasoned the remarks that followed. Mr. Foster has been a leader in this industry for years. He does own the largest privately owned real estate firm in the country. He did build that himself. He has generously put money back into the community every year. He is probably over 70 years old. Even if you disagree with his corporate actions, he deserves some respect. Your referring to him as P. Wesley Foster Jr may be seen by some as rather flippant and disrespectful. Is it possible your blog would have lost punch by calling him Mr. P. Wesley Foster Jr? You say you have nothing personal against the firm and this sort of disrespect is very personal.

    Tchaka – The same can be said for your referring to the man as Foster Jr.

    It may be generational, but referring to him in that fashion denotes a lack of respect for the man, his postition in our industry and his accomplishments. It may start some readers off on the wrong foot which could lead to your point being missed or actually lost in the haze.

    Thank you for the clarification of the intent of the article. You actually believe that Long and Foster’s policy of advocating Prosperity Mortgage is skirting the RESPA policy? It is actually your judgement that telling agents when the company does well, everyone benefits is an indication that suggesting clients speak with Prosperity Mortgage is a quick slip through the RESPA rules?

    The relationship between Prosperity Mortgage, Wells Fargo and Long and Foster has existed for several years. Before it was formally announced it was vetted. Attorneys that actually practice law reviewed the business plan, the relationship and whether or not it would be in violation of federal statues. It passed muster and has not been convicted of any wrong doing. It should be noted that Mr. Jim Weichert has Weichert Financial set up and running and stongly urges his agents to use them as well.

    It is not a RESPA violation unless the agent receives a direct benefit such as cash, trips, etc from their use of an ancillary service. Agents all across the country have legal relationships regarding shared marketing with various lenders, title companies, etc. Many agents have attempted to create the illusion of one stop shopping for the consumer. Most large brokerages have a relationship with a lender. It is marketed as one stop shopping.

    Now Frank, here is where you use your literary skills to obfuscate the point.

    How much does Prosperity make on that deal? $200? $1,000? If L&F didn’t take their cut, either

    1. The lender would make more or…
    2. The consumer would save more.

    That is why the RESPA law was created, to make sure real estate companies didn’t use their power and client trust to funnel them to a lender that lines there pockets with an extra $1,000.

    Now if Prosperity Mortgage was a partnership that cut out the marketing expenses for loan officers (ie they don’t have to advertise, but just take deals directly from L&F agents) and as a result ALL the savings were passed to the consumer, that I would see as a great example of packaged services and a consumer value add. But when you grab $100 or $1,000 from the deal, one has to wonder if that $1,000 could have been saved by going to another lender.

    Long and Foster does not take a “cut”. Prosperity is a joint venture with Wells Fargo and Long and Foster. There is no taking a cut. The profits of Prosperity are shared between Long and Foster and Wells Fargo. There is no fee schedule. Prosperity has an operating budget and is expected to earn a profit like any other company. Prosperity must remain competitive to survive and regardless of any statements to the contrary, they are surviving. I do not know the details of the arrangement between Long and Foster and Wells Fargo, but to the consumer it is of no importance. Prosperity is a lender. Prosperity has not stopped lending. Prosperity has not been relegated to the status of a corrupt sub-prime lender. Prosperity remained available throughout the recent loan crisis and the firm was available to save deals lost to the major players that folded at the end of the month during the summer.

    I have only had one client, decide to use Prosperity. I have never used them myself. I certainly have no problem advising anyone of their existence and availability in the office. From my perspective, it would be nonsense to overlook an accesible source of pre-qualification and possibly a loan for my clients.

    I have retyped your post in a word document and replaced your term for Mr. Foster with Mr. Foster, and realized, I probably agree with the majority of what you say. I do not see his extolling agents to use Prosperity as a end around the RESPA regulations.

    Most agents, working for firms that have relationships with lenders, soon turn a deaf ear to the weekly pleas at sales meeting to use those lenders. The only successful in-house lenders I have known actually get out of their office and develops relationships with the agents. As any experienced agent knows, you must have sources to give clients and you are better suited to have a professional relationship with several of the major lenders in your area. Maybe Mr. Foster’s email did not bother me because it was nothing more that another request to keep Prosperity in mind. His shots at Bank of America were duly noted. I am one of the agents that has had clients use Bank of America on several occassions. I don’t really care that they refer business out. Anyone that truly understands our industry knows that lenders have fewer leads to share.

    New agents may take the email as a personal message from the President of their brokerage. New agents in any office may be more inclined to use the in-house lender as a primary referral. Once an agent survives their initial several dozen transactions, they will usually have a better handle on which lenders will actually complete the deal in a timely fashion and which ones are usually a day late and a dollar short. Agents need to know the range of available rates at any time. Specific rates will be the fodder of lenders.

    Thanks for bringing this issue to Active Rain. I will agree to disagree (except on the respect part, but I am an old guy and feel comfortable playing the old guy card at times.).

  30. FRANK LL0SA Va Broker- BLOG.FranklyRealty.com says:


    I do not have a copy of the letter. All I have seen is what the Post quoted. Maybe a L&F agent is willing to post it here.


    The issue isn’t Long and Foster making profit, the issue is whether agents getting an indirect benefit violates RESPA.


    I’ll have to read that after lunch.


  31. Fran Gaspari says:


    I just came from voting…I would have pulled the lever instantly had I seen your name on the ballot!
    It is a breath of fresh air to see this whole RESPA CBA thing ‘exposed’ for the consumer to see.

    Of course the whole RESPA provision that the controlling entity compete in the marketplace for other business is ludicrous…solicit who, solicit what? The unfortunate thing is that guys like John want to do the right thing but are caught in the middle! Thanks, Fran

  32. Lake Norman Real Estate ~ Diane Aurit says:

    Frank, I hesitate to get in the middle of this but having just left one of the nation’s largest privately owned firms partially because of the pressure to use their lender, home warranty, insurance etc. I would like to weigh in. Obviously, the one-stop shopping concept was created to generate more profit for the firms. When the focus of weekly meetings is awards to agents who use in-house services and there are charts with stars in the work room for agents who use all 5 in-house services etc. then I think the consumer’s best interest is no longer being served. My only responsibility is my fiduciary responsibility to my buyers and sellers and I will not jeopardize that because of pressure from a firm to use services that may not be in the best interest of my clients.

  33. Boomer Foster says:

    The thing that really bugs me about the Post article, this blog and some of the responses is that Wes Foster’s e-mail is being construed as some sort of directive. He is being maligned for simply requesting that L&F agents use our prestige partners. No where in the e-mail does he insist that we do anything that that contravenes the best interest of our clients. He simply points out truths that some may not have considered. Those truths include the fact that L&F is not one of Bank of America’s preferred real estate companies even though our agents sent them over 2200 loans this year. My experience is that most people buying homes now a days are pretty savy. They want options. What is wrong with asking agents to make their broker’s mortgage affiliate one of those options?

  34. Tchaka Owen says:

    Nancy – builders/developers who tie huge incentives to the use of their lender IS an impropriety. There have been blogs on that issue here. If you can’t find that, go to CreditBoards.com and search it. Yes, that’s a problem.

    John – I’m going to take a sidebar from the main issue and address something else from your last essay: respect. It’s obvious that you admire Foster, Jr. for his accomplishments and that’s wonderful. If you prefer to address him as “Mr. Foster”, that’s your choice. However, he is appropriately referred to as “Foster, Jr.” in the same manner as “Gates”, “Dell”, “Ellison” and others are termed, and i’m sure there’s no disrespect intended there. Perhaps he’s actually “Foster” and not “Foster, Jr.” but based on the initial listing of his full name, it’s only logical that the “Jr.” be added. certainly

  35. John MacArthur says:

    Tchaka – Possibly, as I mentioned before, it is a generational difference. Many members of Gen X or Y or whatever those under 35 are calling themselves thing that it is hip to refer to others in the fashion that you have presented. One only listen to conversations about football to hear “T.O.” or “O.J.” or discuss music and hear “Michael” for Michael Jackson (not to mention it could also be Michael Jordan).

    In the business world, there are standards of propriety used for quite some time. Those of us that have been involved in business are generally more comfortable using decency and respect. I am not familiar with the usage that you state appropriately refers to Mr. Gates and others by simply using their last name.

    I think it is just a “hip” phraseology that is in line with the rest of the coming generation that has not been asked to learn respect for people, places, things and last but not least money.

  36. Tchaka Owen says:

    Yeah, I don’t like it when people call me “TO”, particularly since some might confuse me with that cancer over in Dallas.

    The usage I’m referring to comes in many forms: WSJ, NY Times, BusinessWeek, CNN, Kiplingers, the list goes on.

  37. Russ says:

    I find it funny that Realtors will defend this practice of in house lenders, but will cry bloody murder when banks start lobbying to sell real estate. It is ok for Realtors to finance homes, but not ok for Banks to sell them?

    I love it when a Realtor calls asking for the GFE. We know that game. Taking my client’s GFE to give to your in house Realtor.

    I recently hosted a home buying seminar and I asked a Realtor from Coldwell Banker to join me. Her managing broker would not let her advertise with me due to their “relationship” with their in house mortgage services. Lovely.

  38. David Conaway says:

    I wonder if banks should get in the real estate business? I know they can’t, but i’m sure there is a way to get around it. It could be in the buyers best interest. In many cases the buyer talks with a loan officer prior to looking for homes…and it would save the buyer time. Would that make things right? My guess is no. It would turn the ABA concept on it’s head but it won’t address the underlying problem.

    The key to this argument is intent. What was the intent of RESPA? Is it always in the buyers best interest to use an in-house lender? Who is the lender accountable to? I think a little separation is a good thing.

  39. Tchaka Owen says:

    Oh no Frank, I wouldn’t personally attack another AR member. I might not see eye to eye with someone and a little sarcasm might come into play, but healthy debate is good for all of us.

    I think we should focus on the RESPA issue again and I like what David has asked above. I actually don’t have a problem with the existence of an in-house lender, particularly if they do a good job for the client. What I wonder is if it’s possible to ensure transparency between a real estate brokerage and an in-house lender or is that an untenable goal.

  40. FRANK LL0SA Va Broker- BLOG.FranklyRealty.com says:

    Hey David Conaway,

    NAR has been trying to get banks out of Real Estate for years. I’m actually open to debate on that, as I don’t simply rubber stamp anything that NAR does. As for the way around banks in Real Estate, it is called… Credit Unions. They are “Banks,” but not “Banks.”


  41. FRANK LL0SA Va Broker- BLOG.FranklyRealty.com says:

    ello Catherine,

    She wrote a great former insider post.

    I have no issue with a broker recommending a lender. I do hesitate, but ultimately have little problems with the broker making money on the lending side (still open to debate on this).

    The problems lies with how far does one take it.

    Where is the line between “asking” and “telling?”

    Is “nudging” ok, are “bonuses” or “awards” ok?

    How about the subtle office cold shoulder if you don’t use their partners?

    While many say that they do give options and don’t get bullied into using partners, some aren’t as strong and they are voicing that they have been victim to these pressures.

    Do we agree that pressuring, no matter how little, is inappropriate?

    If that letter is pressure or not, that is for everyone to debate (will somebody post it here?). But can we agree at least that pressure, bonuses, awards, and DIRECT benefits might not be following RESPAs intent.

    If we agree on that, then we can debate whether INDIRECT benefits such as “more advertising” (and I assume that means to ALL agents without regard to who uses partners) is acceptable.


  42. Linda Tremblay says:

    I am also a Long & Foster agent and I do not feel pressured to use the affiliated companies. I use whoever I think will get the job done. I have used the in house company and other mortgage companies that are not affiliated. I usually always use the in house title company since in PA the rates for title insurance are all the same and it is much easier to make sure all is okay for my clients when I actually know the people.

    Having said all that, my commission is the same, I get the same ads in the newspapers, and all other things that L&F provides whether I use in house or not. I joined L & F because they let me conduct my business as I want to (ie: Independent Contractor) as long as it is done legally and ethically. I did not take Wes”s memo as a threat, I took it as he is trying to keep the company strong. I have seen in house mortgage at Weichert, CB, Pru, KW and even Re/max. Almost all of them have in house titile, and in house insurance, too . I imagine that there is money in in for all the brokers, whether it is a partnership or rent paid for an office. However, I only care who treats my clients the best.

  43. Anonymous says:

    Great story and great blog.

    For me, this situation represents the ultimate betrayal to both the client and the agents who work at Long and Foster. The broker/salesperson licensing scheme is in place to empower brokers to supervise their agents. That hierarchy is in place to ensure that agents don’t run amok and cause injury to consumers. To use that hierarchy to engage in a self dealing practice that at the very least presents an insurmountable conflict of interest is atrocious.

    In agency law, even the appearance of impropriety is unacceptable. In addition, brokers should never “sell” anything to their clients, they can only provide untainted advice. In fact, fiduciaries are supposed to go so far as to even avoid conflicts of interests. That means not setting up an in-house mortgage or title company in the first place! And for all those out there who claim that One Stop Shopping is a benefit to your consumers, remember, the fact that you even are part of such a scheme makes everything you say in that regard appear to be self serving. My point is, you could never present an affidavit and be taken seriously because your statements are all tainted in that you or your firm profit from the scheme. A court of law would probably throw it out as self serving (the judge in the Burnet case on Friday claimed to not even read the affidavits of agents for that very reason).

    How are the agents supposed to know this if their own brokers are selling them down the river when it comes to proper representation of their clients? I’ve heard that many large companies even have a list of objections and how to overcome them if their client doesn’t want to use the inhouse services? Apparently at many large companies the managers get huge bonuses based upon how well they persuade their agents (whom they are supervising) to use in-house services. Many of the perks (at the firm, not necessarily at the agent level) that are supposed to be disclosed to the client are kept hidden from the agents. So the agents are in a position where they couldn’t disclose all its broker’s conflicts even if they wanted to. This culture of betrayal is not only wrong, but its illegal both under civil and CRIMINAL law.

    I bet Washington has a set of real estate licensing laws that impose fiduciary duties on their brokers and agents. I think a well written complaint from a Long and Foster real estate agent needs to be sent to the regulatory authority there asking for some enforcement action.

  44. zapoteca says:

    I was an in house mortgage lender for two years. I worked on commission, with a warehouse line which enabled me to offer extremely competitive pricing. As in, I made sure I had the best rate and terms, because I could afford to. During that time, I sat open houses with Realtors with whom I had made friends and bought them coffee, because they were stuck and couldn’t leave; I frequently came into the office at 8 pm and stayed till 11 to help Realtors’ customers get a qualification letter to submit with their offers, on fifteen minutes’ notice; I learned all the FNMAE Community Lending products to AVOID putting marginal folks into sub prime loans. NOTHING I ever submitted blew up, because I was meticulous. Nevertheless, I was treated like whale cr*p on the bottom of the ocean by the majority of the realtor contingent, who would INVARIABLY steer their 9-5 business to other channels. I endured abuse from Realtors whose customers complained if their homequity credit lines, which were pegged to prime, adjusted prior to closing (umm..because prime went up?). I was threatened with the loss of my license for refusing to bully a loan through. This was in a state which does not require licensing for mortgage brokers. To say that my view of realtors is jaundiced is an understatement. The good thing: if I am ever again in a difficult working situation, I have this to look back on. I can feel grateful that at least I am not back at XX CT Realty.

  45. Anonymous says:

    As someone who worked at a very large closing company in partnership with a couple of the major real estate brokerages in the NOVA area (and I worked directly with the money exchanging hands), I would like to point out that this is really just the tip of the iceburg. Agents, of course you say that this isn’t occuring and that the partnerships are the best for your clients. I would like to respectfully disagree. These types of “partnerships” do not benefit anyone except for the select few who stand to make the highest profit margin. You can package it up in the prettiest paper you want, but the truth is still the truth.

  46. Bernadette says:

    Frank, I have a question. I am currenlty renting and recently a family member bought to my attention the house I am renting was on the market for sale. After trying to contact my landlord several times to find out what was going on, he never returned my calls..Finally last week (1st of the month), I received a call from him stating he could not keep up with the mortgage payments and the house was put on the market for a short sale. As a rentor, what does this mean for me. Do I have any rights? My landlord has my security deposit and my last months rent..5,000. I am very scared for me & my family (moving with no notice), should I pack up now and leave or should I wait to see what happens? Also I tried talking to the listing agent, but they refuse to talk to me…Please help:(

  47. FRANK LL0SA Va Broker- BLOG.FranklyRealty.com says:

    Hello Bernadette,
    I am not a lawyer.

    You need to talk to a lawyer ASAP. If you don’t get some sort of lien on the property before it sells, you might lose your $5,000. Again, I am not a lawyer, so I wouldn’t know how to do that.

    Did you read my blog on Short Sales? Not sure why you posted here, but that will have more information. You really have to be careful and get legal advice. THe good news is that there is a very good chance that it will not sell in the Short Sale process, but there is a good chance it will go to foreclosure. Could be 30 days, could be 90-120.

    Also you can ask the sheriff about your deposit and your rights and how long it would take to kick you out.

    If it sells as a Short Sale, I do believe you have rights, if you get in line (for reimbursement) EARLY. If they sell this place without you knowing and they close on it, it will be too late and VERY hard to get your money. But if you interrupt the sale and when they go to closing, there is some sort of paperwork stating that you get reimbursed, you might get money back.

    Also don’t make any further payments until you talk to a lawyer. Also look in the paper for any notices for when the foreclosure might be.

    Sorry to hear about your situation, but yes you need to at least START looking ASAP.


  48. Julie says:

    I'm a former L&F agent. I never felt pressured to use the partners. I did when they were very good and ignored them when they didn't perform professionally. But that was partly a function of who my broker was at L&F.
    I've heard the stories of offices where the broker pushes very hard for agents to use these partners. A good broker tells their agents to do the right thing for their clients. A bad broker worries more about the company bottom line and takes a very short sighted approach.

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