Circle Points™ Program

Issued by: Andrew Heisley, CEO, Circle Home Loans (a DBA of Priority 1 Lending LLC)

Subject: Legal Defense and RESPA Compliance of Realtor Engagement and Marketing Reinvestment Program

1. PROGRAM OVERVIEW

Circle Points™

is a proprietary engagement and reinvestment system operated by Circle Home Loans for participating real estate agents. It functions as a performance-based loyalty and marketing credit framework that allows agents to accumulate non-transferable marketing credits based on closed loan transactions and brand-aligned activities.

Circle Points™ are issued exclusively as a result of completed transactions or permissible engagements, and are redeemable only for business-building tools and marketing services offered by Circle Home Loans and its affiliates.

2. COMPLIANCE OBJECTIVES

This document affirms that the Circle Points™ program:

Complies fully with Section 8 of the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. §2607.Maintains compliance with HUD’s interpretive rules and CFPB enforcement guidance. Avoids any practices that could be construed as a kickback, referral fee, or thing of value in exchange for the referral of settlement service business.

3. STRUCTURE OF THE PROGRAM

3.1 Point Accumulation

Circle Points™ may be accumulated in the following ways:

Post-Closing Reward: After the successful funding and closing of a loan originated by Circle Home Loans, points are assigned based on loan volume. Voluntary Engagement: Agents may also accumulate points through educational webinars, training sessions, marketing meetings, and other non-referral based interactions. These points are not redeemable unless a transaction closes.

3.2 Redemption

Points are non-monetary, non-transferable, and carry no cash value until a loan closes. Points may only be redeemed after a successful loan closing, and only for marketing services that comply with RESPA co-marketing and advertising cost-split guidelines. Services include—but are not limited to—branded social media campaigns, listing video boosts, SEO tools, and other compliant promotional materials.

3.3 Disclosures and Agent Participation

All communications, marketing decks, and agent onboarding materials include the following disclosure:

“Circle Points are awarded based on participation and completed loan transactions. Points are not redeemable or usable unless Circle Home Loans successfully funds a mortgage transaction. No referrals are required, and agents are under no obligation to use Circle Home Loans to participate.”

4. RESPA COMPLIANCE ANALYSIS

4.1 RESPA Section 8(a) – Prohibition Against Referral Fees

"No person shall give and no person shall accept any fee, kickback, or thing of value pursuant to any agreement or understanding... that business incident to or a part of a real estate settlement service... shall be referred to any person.”

— 12 U.S.C. §2607(a)

Compliance Justification:

No fee or thing of value is given in exchange for a referral. Points do not incentivize referrals; rather, they are tied to business performance (i.e., closings).There is no agreement—express or implied—that an agent must refer business in order to receive points.

4.2 RESPA Section 8(b) – Prohibition on Fee Splitting

“No person shall give and no person shall accept any portion, split, or percentage of any charge made... other than for services actually performed.”

— 12 U.S.C. §2607(b)

Compliance Justification:

Agents are not paid any portion of a settlement fee or commission. Circle Points are redeemable only for actual, deliverable services such as compliant advertising, branding, and business development tools—not cash or commissions.

4.3 HUD & CFPB Interpretive Rules

According to prior HUD policy statements (particularly 1996-2) and subsequent CFPB interpretations:

Joint marketing or promotional tools are permitted if the costs are proportionally shared and not conditioned upon referrals. Incentives related to educational participation are permitted as long as no quid pro quo exists for referrals.

Circle Points™ satisfies these requirements by:

Ensuring agents do not receive disproportionate value without closing a deal. Tracking engagement and services tied to business results. Publishing terms that forbid referral-based conditioning.

5. GOVERNANCE, TRANSPARENCY, AND RECORDKEEPING

All Circle Points activity is logged and monitored through internal CRM and auditing tools. Circle Home Loans maintains documented proof of participation, closings, and redemptions to verify compliance. A compliance officer reviews all campaigns, offers, and promotions quarterly to ensure alignment with HUD/CFPB regulatory standards. Any agent may request a Circle Points Program Terms & Conditions Disclosure, which outlines all restrictions and redemption policies.

6. RISK MITIGATION & PROHIBITIONS

To further protect the integrity of the program:

No advance marketing work is performed for agents who have not closed a loan. No agent receives Circle Points in exchange for a “promised” deal or verbal commitment. No referential treatment is given to agents who refer clients unless a loan has funded. No exclusivity or steering is encouraged or implied.

7. CONCLUSION

The Circle Points™ system is

compliant, auditable, and built upon the principles of transparency, fairness, and earned value. It supports agent growth only after Circle Home Loans has delivered its own service and earned business through performance—not promise. All program policies are guided by counsel, regularly reviewed, and designed to hold up under any regulatory or legal scrutiny.