The Real Estate Settlement Procedures Act (RESPA) prohibits anyone from giving or accepting “something of value” in exchange for an agreement or understanding that the person will refer real estate settlement services.
CFPB Doubles Down on Marketing Services Agreements (MSAs) and other real and perceived RESPA violations.
The Consumer Financial Protection Bureau (CFPB) has taken a very different view from HUD on the permissibility of MSAs and is going after actions that even have a hint of being a kickback in a way that HUD never did. In addition to issuing a warning in July that caused Prospect Mortgage, Wells Fargo and Bank of America to discontinue MSA arrangements, the CFPB has been on the warpath fining lenders, title companies and real estate brokers alike for alleged kickbacks and other RESPA violations related to MSAs and other activities that are common to sales agents’ business models. The CFPB is also partnering with state regulators to go after “inducements” such as such as excessive meal and entertainment expenses given to attorneys, real estate agents and others in an attempt to obtain business.
In South Jersey and the Shore it has become common for title companies to cater open houses and provide agents with customized marketing materials and sometimes handle their “processing”. New Jersey has had a long history of aggressively regulating in favor of consumer protections. These practices might be an unwelcome invitation for the CFPB to come and take a closer look. Why? Because these activities appear to be, unambiguously, “something of value”.
Read on for examples of CFPB enforcement actions involving “something of value”: