Page 81

sages from the CFPB and other regulators. While the state regulator referenced above has reportedly said they haven’t seen a compliant MSA program yet, this specific state regulator hasn’t cited anyone for a violation. And while the CFPB has clearly indicated it does not like MSAs, lenders who are currently going through or have very recently completed a CFPB examination are not being cited for RESPA violations in their MSA program. Is the examination side of the CFPB not on the same page as the enforcement side of the CFPB? Or are these lenders managing their MSA programs properly and the CFPB is recognizing that? Is there a way to administer a compliant MSA program? If the CFPB is not issuing findings on the MSA

programs it is currently or has very recently examined, then there must be a way to compliantly implement and maintain an MSA program. As you can see, there is no easy answer here. Whatever the lender’s decision is, it clearly has regulatory risk, as well as business and reputational risk. How much risk is one willing to take and how big is the checkbook? How much will it cost just to respond to an action or investigation? What else will the regulator find when they start poking around? Is the company’s board of directors willing to take this risk? Will it agree with the decision to continue offering MSAs when hit with a Consent Order and a fine? How will an encounter like this impact the compa-

ny’s ability to recruit loan originators and other needed talent? How much business will a lender lose if it stops offering MSAs? Most lenders are reportedly exiting MSAs while others are not. The stakes here are high. H. Burton Embry is executive vice president and chief compliance officer with Salt Lake City-based Primary Residential Mortgage Inc. (PRMI). He specializes in mortgage banking compliance, quality assurance and risk management, and has more than 30 years of experience in mortgage banking compliance. He can be reached by e-mail at or by phone at (801) 596-8707, ext. 1000201.

Why choose MBS Highway? BARRY HABIB— THE ORIGINATOR OF THE MARKET ADVISORY SERVICE Daily guidance and insights from Mortgage Market expert Barry Habib. He closed over $2 Billion in production as a Loan Originator, called the bottom of the Housing Market and currently provides sales and market training to thousands of Loan Originators across the country. STATE OF THE ART, USER FRIENDLY WEBSITE We've taken great pride in building a website that uses new technology, and enhances the user experience. No matter where you are on our site, you'll always have market data in sight. Never miss a lock alert with our real time market news and alert system.

EASILY SHAREABLE CONTENT With a touch of a button members are able to share charts showing the latest economic and housing data.

REAL ESTATE DATA & INSIDER CONTENT Show the housing opportunity in your local market to customers and real estate agents. We will provide you with affordability levels, appreciation, resale volume, new construction, and job growth…updated monthly and easily shared. There is also additional content from Art Cashin, Kiplinger letters, and much more.


CALCULATORS AND TOOLS Powerful and unique calculators to help you when presenting to customers. Buy vs. Rent, ARM vs. Fixed, Paying Points, and Amortization calculator are a few examples. You can save and share the results to beat your competition.

What you're getting with your MBS Highway trial l Bond Quotes l Daily Video and Transcript l Interactive Charts l Lock/Float Advice l SMS Updates l Real Time Market News l Cashin's Corner l The Kiplinger Letters l Real Estate Market Data l By The Number$ l MBS TrendTRAKR l Social Share

Try it FREE for 14 days at

n National Mortgage Professional Magazine n DECEMBER 2015

Always stay in touch with the market when on the go with our Mobile Web App. It's fast and easy to use. Whether you have an iPhone, Android, Blackberry, Windows Phone, you'll always have access to MBS Highway. No downloads, no annoying updates, just visit in your phone or tablet's browser.


skeptical of MSAs, but because many small- and mid-sized lenders will continue to offer them, some large lenders may believe they have to continue to offer MSAs to stay competitive. Several small- and mid-sized lenders believe they have little to lose and that they are too small to be on the CFPB’s radar, so exposure is minimal compared to the large lenders. “Even though the CFPB is encouraging ‘whistleblowers,’ many of our clients are staying in the MSA game but entering into fewer arrangements with fewer services in order to minimize their risk and compliance burden,” said Loretta Salzano, a partner at the law firm of Franzen & Salzano. “It makes sense that larger lenders with hundreds of MSAs would exit the market as it is virtually impossible to manage and monitor MSAs all across the country and prove the reasonableness of compensation among them and the performance of services. In light of the CFPB’s recent bulletin and their informal statements, I fear that no matter how good a job a lender does of dotting ‘I’s and crossing ‘T’s, MSAs just might be a ‘no win’ proposition” Still, another reason to keep MSAs is to retain loan originators (which may also be a red flag). Some loan originators may say they will leave a company if MSAs are no longer being offered. No company wants to lose loan originators, especially those who are originating a significant volume of loans. But if the promise of business is dependent on the existence of an MSA, that may be a sign that the MSA is not being used for the proper purpose. Remember, MSAs are about promoting a company, helping to get a brand out in the public domain and in front of prospective homebuyers and borrowers, not for simply putting money in a real estate agent’s pocket or for the promise of their referring a company’s business. Speaking of real estate agents, the CFPB has shown little appetite for holding them accountable for RESPA violations. At the recent MBA Annual Conference, CFPB Director Richard Cordray commented that real estate agents would be held accountable the same as lenders and other settlement service providers. That said, seeing is believing, and until the CFPB has demonstrated that they will hold others accountable, a lender should figure that it will bear the brunt of any violation when it comes to an MSA. Then there is the risk of whistleblower complaints. How are loan originators from companies who have pulled out of MSAs at the urging of the CFPB going to react when they see other companies going in and replacing them? The CFPB actively invites whistleblower complaints and has said they are seeing an increase in the number of whistleblower complaints. There will undoubtedly be a number of whistleblower complaints lodged against companies who continue with MSAs. Lenders are also getting mixed mes-

Profile for NMP Media Corp.

National Mortgage Professional Magazine December 2015  

National Mortgage Professional Magazine December 2015  

Profile for nmpmag