This topic tends to be a hot one. Many folks will say that performing both functions is a conflict of interest. I have never pursued selling homes because I don't want an appearance of impropriety to my good Realtor clients (they feed my family and send my little girl to private school). Personally, I don't see the conflict of interest. If anything, I believe that a Realtor may be the better choice to find financing for the buyer.
Some people have said that HUS disallows it. That is just not correct. HUD issed a ruling in 1999 that said that no employee of a HUD- approved lender could have a real estate license. Well, in California, there was an uproar because many loan brokers fall under licensing by the Department of Real Estate. HUD backed off of that requirement in 2001.
Here are the basic rules for compensation to Realtors for loan brokerage:
1- It must be disclosed to the buyer that the Realtor may be receiving compensation for loan origination. It must be disclosed on the purchase agreement and loan disclosures.
2- The Realtor must perform 3 of the 13 origination functions as defined by HUD.
3- The Realtor must have an employee/employer relationship with the mortgage brokerage lender; inasmuch, they're paid W2 wages for their commission.
4- Fees charged for loan origination must be consistent with fees charged by the other originators at their employer.
I hope we hear from agents on both sides of this issue.
An article from your California Loan Connection.
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