Legal Blog

Compensation and Compliance Matters: Read Between the CFPB’s Lines for Marketing Services Guidance

Recently, the Consumer Financial Protection Bureau fined Prospect Mortgage for violations of Section 8 of the Real Estate Settlement Procedures Act. The initial reaction by many is to point to this case as additional evidence of the dangers of, and reasons to avoid, co-marketing and marketing services agreements.

I see it differently: Notice what the CFPB did not say. Rather than determine that MSAs, lead agreements or co-marketing agreements were simply illegal, the CFPB found only certain behaviors illegal. Moreover, with all due respect to the respondents, the alleged activities are of the sort that it is not surprising that the CFPB took action. Indeed, while few would object to paying for leads, in this case the actual real estate agents — not merely the brokers — received dollars under the lead fee payments from brokers to actually steer customers to the lender. Hence, the CFPB is effectively alleging that the lead agreement was merely a vehicle to disguise actual payments to real estate agents for steering borrowers.

Click here to read the entire article on National Mortgage News.


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