Importantly, the consent orders confirm that there is no general RESPA prohibition on agreements between processing service providers for advertising, marketing, office rentals, prospects and other services or goods per se. While some of the conduct alleged in the orders, if true, raises fairly obvious respA issues – such as cash payments for referrals – the CFPB has also relied on claims regarding the terms of the lender`s agreements, how they were enforced, and other related circumstances. Worryingly, the CFPB has focused on countless common practices that are not prohibited by RESPA. In addition, the CFPB again circumvented a legal exemption from RESPA that has long been invoked because it explicitly authorizes payments as long as they are reasonably related to the value of the goods or services provided. Instead, the CFPB`s view comes – as evidenced by its PHH case currently pending before the D.C. Circuit Court of Appeal – it appears that paragraph 8(c) is void if the fees paid can be considered as compensation for referrals, even if those fees are equal to the fair value of the services or facilities received. This position of the CFPB seems unchanged, despite an outright ruling by a panel of judges from the D.C. circuit that Article 8(c)(2) of the RESPA is an exception, a decision that the CFPB is currently challenging. Some companies have loan officers who post on social media sites like Facebook and LinkedIn. These contributions are usually advertisements for money or gift cards in exchange for referrals, with additional financial compensation for such recommendations that lead to the conclusion of a loan. While this may seem like an innocent trick to generate business, such fees may not be paid or collected for a service that has not yet been provided. With a simple online publication, the loan officer submits himself, the employer or both to a violation of Article 8 of the RESPA.
This, in turn, can lead to civil and criminal penalties, negative publicity, and damaged reputation for both the individual and the company. Johnson added that NAR has informed its members that they may enter into MSAs and other solicitation agreements as long as the prices of the services are based on their fair market value and not on the number of referrals made. The court appears to have erred in law, although this likely had no bearing on the finding that the plaintiffs had plausibly claimed payments from the lenders in exchange for recommendations from the agents. The court considered RESPA`s « recommendations » not only to alleged attempts by real estate agents to influence customers in choosing the participating lender, but also to cases where agents only shared customers` names and contact information with lenders who had chosen to let that information go only to the agent. 2019 WL 1755293, at *4-5. While providing a lead to a lender may be problematic for other reasons despite the customer`s wishes, it is not a « recommendation » as defined by RESPA that instead requires the referring party to (i) positively influence the customer`s choice of supplier or (ii) ask the customer to use that supplier. (12 C.F.R. § 1024.14(f).) The simple purchase of leads or leads, which the buyer can then contact himself, has long been considered authorized by RESPA, at least if the seller of the prospects does not support the buyer or his product or service. « In particular, the bureau was very critical of the component of this agreement, where the brokerage was an integral part of the guarantee that, in the context of the sale of the `leads`, the broker ensured that the leads that were or became its clients were passed on to Prospect Mortgage in various ways; This is partly the trigger for the violation of Article 8(a), » Riley added. For example, Prospect paid a broker between $25 and $500 per lead, depending on the type of lead.
The broker then passed some of that money on to his agents: « During the broker`s monthly meetings with his agents, the broker physically distributed $20 notes to his agents, one for each consumer that the agent addressed to one of Prospect`s loan officers, » the prospect`s consent order states. The RESPA Section 8 Guidelines on Fee Collection and Bribery were amended in December 2013 when the Federally Regulated Financial Institutions Review Board issued a directive on social media and published the CFPB rules to complement the FFIEC guidelines. With the advent and growing popularity of social media, it is very easy for financial institutions to attract customers with a Facebook post or Twitter tweet. Given that consumer protection is a major concern for these regulators, the rules and guidelines have been implemented to address the risk of increased harm to the consumer, as well as the likely compliance and legal risks that businesses may face when embarking on this new path of social media as a way to start a business. .
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