Many mortgage lenders and real estate brokerages have suspended marketing services agreements (MSAs) in the wake of the Consumer Financial Protection Bureau (CFPB) issuing a major enforcement against companies accused of violating the anti-kickback provisions of the Real Estate Settlement Procedures Act, known as Respa.
MSAs are structured in different ways, and the CFPB has not prohibited them outright, noted Colgate Selden, counsel in Alston & Bird’s Financial Services & Products Group and former senior counsel in the CFPB Office of Regulations.
“Where those arrangements may cross into illegality is when payment to the brokerage is based on how much business comes the lender’s way, as that creates an incentive for the brokerage to steer customers toward the lender,” Selden said. “The bureau’s enforcement actions so far have tended to be more obvious violations.”
MSAs are structured in different ways, and the CFPB has not prohibited them outright, noted Colgate Selden, counsel in Alston & Bird’s Financial Services & Products Group and former senior counsel in the CFPB Office of Regulations.
“Where those arrangements may cross into illegality is when payment to the brokerage is based on how much business comes the lender’s way, as that creates an incentive for the brokerage to steer customers toward the lender,” Selden said. “The bureau’s enforcement actions so far have tended to be more obvious violations.”