This past week, (October 5, 2015), the Consumer Financial Protection Bureau (CFPB) issued a Compliance Bulletin with the subject line: RESPA Compliance and Marketing Services Agreements.
It was a rather lengthy document (approximately 5 pages), but the information provided is very relevant to the real estate and lending communities with regards to the interpretation of the legality of Marketing Service Agreements and compliance with the Real Estate Settlement Procedures Act aka RESPA.
This document answers questions, which many have had in recent months, about how the CFPB will address, investigate and enforce RESPA guidelines pertaining to this issue in the future. Due to the length of the document, I've broken the information into 'bite sized' segments. The series is delivered in several sections. If you'd like to digest the entire bulletin or reference the information provided below, here's the link: CFPB Compliance Bulletin 2015 - 05
1. What is a Marketing Service Agreement
A Marketing Service Agreement (MSA) involves providers of settlement services such as Lenders, real estate agents/brokers, title companies or home warranty companies providing or accepting payments for advertising or promotional services. According to the CFPB bulletin, MSA's can also involve third parties which are not settlement service providers such as membership organizations.
These periodic payments or fees may or may not be directly related to the volume of business and can involve a wide range of services including: banners on websites, payments for online advertising, payments for office space, physical signage or logo placement on marketing materials. This is not an all inclusive list as there are many creative ways in which these agreements can be set up.
Section 8(a) of RESPA prohibits the giving and accepting of 'any fee, kickback or thing of value pursuant to any agreement or understanding, oral or otherwise, that businesses incident to or a part of a real estate settlement services providing a federally related mortgage loan shall be referred to any person." U.S.C. 2607 (a)
Future blog posts will cover the following: