Thanks to mortgage broker Dan Dobbs for the following important consumer article.
An article in HousingWire reports that due to recent interpretations of the Real Estate Settlement Practices Act (RESPA) by the Consumer Financial Protection Bureau (CFPB), two large lenders have decided to exit the MSA market. The Lenders are Wells Fargo and Prospect Mortgage.
MSAs are Marketing Service Agreements whereby brokerages encourage their agents to use the services of affiliated businesses, such as title companies or lenders, in which the brokerages either have an ownership or other financial arrangement.
The feds believe that many of these MSAs involve kickbacks and fee-splitting between the various companies and are therefore not in the interests of consumers.
Other lenders are expected to join the MSA exodus. The biggest fear is that the CFPB may go back in time and claw-back exchanges of money for referrals it believes are violations of RESPA.