RESPA Hot Topics: Marketing Alliances in a Competitive Mortgage Market

The enforcement landscape under Section 8 of the Real Estate Settlement Procedures Act (“RESPA”) remains largely unchanged, but in today’s competitive residential mortgage market, strategic marketing alliances among real estate brokers, mortgage lenders, title insurance agencies, and other service providers are in high demand, making compliance with RESPA a hot topic. With rising interest rates and a steep reduction in applications for mortgage refinance loans, competition has increased for purchase-money mortgages. In times like these, there is a tendency for settlement service providers to enter into creative strategic alliances as a way to help secure more business. These strategic alliances are subject to Section 8 of RESPA, and when structuring them, companies can refer to recent informal guidance from the Consumer Financial Protection Bureau (“CFPB”) relating to marketing services agreements (“MSAs”) and other promotional opportunities.

This article, originally published in The Review of Banking & Financial Services, discusses the CFPB October 2020 guidance on complying with Section 8 of RESPA, as well as provides practical tips to assist in structuring new or existing marketing relationships.