CFPB Hits Brokers For Marketing Agreements
February 1, 2017
The Consumer Financial Protection Bureau yesterday fined a mortgage lender, two real estate brokerages, and a mortgage servicing company for referral arrangements the companies had entered into that CFPB says are prohibited under the Real Estate Settlement Procedures Act (RESPA).
In a statement, CFPB Director Richard Cordray says the action “sends a clear message that it is illegal to make or accept payments for mortgage referrals.”
The action involves marketing service agreements, an area of RESPA enforcement that the National Association of REALTORS® says generates confusion among real estate companies and others in the industry. The association says its analysts on staff will closely examine the facts of these cases and build on existing guidance for real estate professionals for how to best comply with RESPA.
NAR adds that real estate professionals and others in the industry have been frustrated by the CFPB’s attempts to provide clarity through enforcement actions rather than guidance. This has especially been the case when it comes to marketing service agreements, in which real estate practitioners enter into agreements with settlement service providers to offer clearly disclosed services in exchange for a fee. The agreements, known as MSAs, are permitted under RESPA as long as they are for bona fide services and not simply referral arrangements.
The association says they will continue to talk with the CFPB and will look closely at these latest actions to get a better understanding of the specific circumstances.
Source: "CFPB Enforcement Actions: Real Estate Brokers, a Mortgage Lender, and a Mortgage Servicer," National Association of REALTORS®' Washington Report (Feb. 1, 2017)
Updated: June 21, 2018