On October 8, 2015, the CFPB announced new “Guidance About Marketing Services Agreements,” publishing a Compliance Bulletin on the subject of RESPA Compliance and Marketing Services Agreements. The Bulletin is lacking in clear “guidance,” at least in the sense of outlining regulatory standards, but it does provide an unequivocal warning that marketing services agreements (MSAs) in the mortgage industry are much less likely to pass regulatory scrutiny than in the past.
The CFPB expresses “grave concerns” about the use of MSAs to evade the requirements of RESPA, and they note that certain mortgage industry participants have already stopped entering into MSAs given the RESPA compliance burdens. To ensure that the industry is getting the message, they warn that careful consideration of the legal and compliance risks “would be in order” for all industry participants, especially in light of the increase in whistleblower complaints under RESPA.
Every MSA must comply with the RESPA Section 8 prohibition on the payment or receipt of any fee, kickback or other “thing of value” for the referral of mortgage loan or other “settlement services” business. However, compensation for goods or facilities actually furnished or services actually performed is permissible under Section 8, at least so long as the compensation reflects the fair market value of the goods, facilities or services. The industry has long attempted to rely on this exception for the payments for services actually performed as a means to avoid Section 8 violations. This has usually worked in the past, but it’s going to be much harder to make this work in the future.