Federal regulators are scrutinizing marketing service agreements between real estate brokerage firms and mortgage lenders for violations of anti-kickback laws.
Wells Fargo and Prospect Mortgage separately announced in July that they were ending the use of marketing service agreements with brokerage firms, construction companies and other sources of loan referrals. Both lenders cited doubt about the regulatory compliance issues related to such agreements.
Wells Fargo and Prospect Mortgage in July backed away from marketing service agreements after the Consumer Financial Protection Bureau accused several major lenders of violating the anti-kickback provisions of the Real Estate Settlement Procedures Act, also known as Respa.
In June, the Consumer Financial Protection Bureau, or CFPB, ordered PHH Corporation, a leading mortgage lender, to pay a $109 million penalty for Respa anti-kickback violations.
Chris Polychron, president of the National Association of Realtors, has asked the CFPB to make clear “that there are acceptable ways” to enter into marketing service agreements.
But “there was always too much of a quid pro quo” with marketing service agreements, John Councilman, president of NAMB, the Association of Mortgage Professionals, told the New York Times.
Councilman said the majority of mortgage brokers will welcome the end of marketing service agreements because they favor larger mortgage brokers. [New York Times] — Mike Seemuth