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Potential Negative Impact of MSA's and RESPA Compliance

Real Estate Broker/Owner with Lola Audu~Audu Real Estate~Grand Rapids, MI Real Estate

This is part 5 of a SeriesThis 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.  This is to date, the most comprehensive profile of the Bureau interpretation of RESPA compliance for real estate service providers.  Because, it is a lengthy document and contains a lot of important information, I have broken up this blog post into several 'bite sized' pieces.



The section convering specific concerns occupies much of page 3 of the bulletin issued by the CFPB regarding RESPA compliance and Marketing Service Agreements (MSA's).

In a previous post, we mentioned the following:

1.  Increased Costs to the Consumer for services

2.  Steering



But there is also another troubling trend which the bulletin highlights.  The issue of NOT providing service at all, yet being paid as though services were provided.  The following sentence highlights this issue:  "In the course of investigations, the Bureau has found many examples of settlement service providers keeping payments received from other providers without actually performing any contractually-obligated services.  They include instances of not performing underwriting, processing, and closing services, not executing title insurance work; not carrying out marketing services; and not delivering financing to fund the origination of loans."


The conclusion drawn by the Bureau is that the only reasonable inference which can be made for all this non performance is that the MSA is part of an agreement to refer settlement service business in exchange for kickbacks.

Future blog posts will cover the following:


1.  What is a Marketing Service Agreement?

2.  Why Might a Marketing Service Agreement (MSA) be against the law?

3.  An Example of a RESPA MSA (Marketing Service Agreement) Violation

4.  Whistle Blowers, Caveats:  MSA's and RESPA

5.  Potential Negative Impact of MSA's (Marketing Service Agreements) and RESPA Compliance

6.  Risk and Liability Assessment for real estate service providers:  MSA's and RESPA

7.  Steering as a Violation of RESPA with Regards to MSA's and RESPA

8.  Penalties for Violating RESPA Provisions with Regards to Marketing Service Agreements (MSA's)