Enforcement actions, bureau-issued guidance, and real estate agent owned affiliated business arrangements (AfBAs) were discussed in a recent October Research webinar featuring Franzén and Salzano President Loretta Salzano and Mayer Brown Partner Holly Bunting, along with SoftPro Director of Regulatory Compliance Leslie Wyatt as moderator.
The session kicked off with what can be learned from the Freedom Mortgage and Realty Connect consent orders issued by the Consumer Financial Protection Bureau (CFPB) – the first in several years directly related to RESPA Section 8(a). Bunting noted the timing of the consent orders was interesting, as they “pretty quickly” followed the bureau’s October 2020 RESPA-related FAQs issuance.
“In those FAQs, they talk about compliance considerations for promotional activities or marketing services agreements (MSAs),” Bunting said. “And, lo and behold, those are the facts we find at issue in these consent orders.”
Both Bunting and Salzano noted the CFPB did not go into specifics about the events it took issue with; the extent of the lender’s participation and whether marketing materials were present were not addressed by the consent order. But those are important factors when settlement service providers are trying to comply with RESPA’s requirements for promotional activities.
Salzano said whether an event or a service is compliant depends on the details.
“It’s important when you’re building marketing strategies, or thinking about sponsorships or entertaining, to consider who’s getting the benefit of these activities,” she said.
As the session went on, Bunting shared what providers should consider before entering into marketing relationships with digital mortgage comparison shopping platforms. She mentioned that even though the CFPB’s advisory opinion on the matter referred to only mortgage shopping platforms in its title, its contents have a broader application in the technology arena for all settlement service providers.
Salzano also reminded the audience about the requirements for AfBAs. State regulators and the CFPB have renewed their interest in these types of relationships and are looking to find bad actors who are using RESPA’s safe harbor as a cover for prohibited activity. In addition to the requirements in Section 8(c), the 10-factor test established by the U.S. Department of Housing and Urban Development in the ’90s is still relied on by regulators when analyzing AfBAs, Salzano said.
Want to hear more about balancing these factors, what questions you should be asking when drafting your MSAs and AfBAs, and other takeaways? Click here to watch the full webinar today.