CFPB ISSUES NEW MARKETING SERVICES AGREEMENT GUIDELINES On September 11, the MBA, along with other associations including the American Land Title Association, the NAR, the National Association of Home Builders, and the Real Estate Service Providers Council sent a letter to CFPB Director Kathy Kraninger requesting that a 2015 Richard Cordray bulletin concerning Marketing Services Agreement (MSA) be withdrawn and replaced “with a reassertion that the real estate industry should follow long established best practices under RESPA and associated case law.” The 2015 bulletin raised many concerns from the mortgage industry about not having clear guidelines on what was permissible.
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ccording to Justin Wiseman, MBA’s associate vice president, the request by the MBA and associates was the most recent of the various efforts undertaken over the past few years to get the CFPB to change its position on MSAs regulatory council. Recently, the bureau pulled its previous guidance on whether MSA complies with anti-kickback rules. In a FAQ post, the bureau stated that the agreements do not violate Section 8 of the Real Estate Settlement Procedures Act. Despite the FAQ not changing much on a practical level, it represents a change in attitude by the bureau from when it was headed by Richard Cordray, whose bureau never illegalized MSAs but instead expressed some degree of hostility towards them. 100
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What is not permissible in an MSA according to CFPB’s FAQ. An agreement to pay for referrals. • • • •
Payment for services over reasonable market value. Agreement where services are not performed or are nominal. The payments are duplicative. The agreement is structured to disguise kickbacks or split charges.
“Eliminating that 2015 bulletin was the best thing that came out of this, even if nothing changed on a practical level,” said Mitch Kider, the chairman and managing partner of Weiner Brodsky Kider, who represented PHH Mortgage in a major challenge to the CFPB’s authority on MSA compliance. “That bulletin was not based on the law itself and deviated from a 2010 Department of Housing and Urban Development interpretation on MSAs.” “It is very helpful to the industry and gives them a clear message of what the issues are surrounding Section 8 and how to, at least preliminarily, analyze some of those issues,” Kider said of CFPB’s recent post. THE POWER IS NOW MAGAZINE | OCTOBER 2020
