On October 8, 2015, following up on a series of enforcement actions against industry participants engaged in "marketing services agreements" ("MSAs"), the CFPB issued a Compliance Bulletin (No. 2015-15) entitled "RESPA Compliance and Marketing Services Agreements ["MSAs"]." The thrust of the Bulletin is again warning companies that "many MSAs necessarily involve substantial legal and regulatory risk for the parties to the agreement, risks that are greater and less capable of being controlled by careful monitoring than mortgage industry participants may have recognized in the past."
The Bulletin begins by describing MSAs as agreements that are "usually framed as payments for advertising or promotional services, but in some cases the payments are actually disguised compensation for referrals." It also advises that, in determining whether an MSA violates RESPA, it will review all of "the facts and circumstances surrounding the creation of each agreement and its implementation."
Indeed, the CFPB's intended message to settlement service providers appears to be that the legal and regulatory risks of being involved in MSAs (to both the companies and individuals within the companies) are simply too great and too difficult to control to justify entering into or continuing them.
Companies and individuals thinking of entering into an MSA or that are currently involved in an MSA should read our full blog post here.
This article is presented for informational purposes only and is not intended to constitute legal advice.