When it comes to mortgage marketing agreements, be afraid, be very, very afraid. That’s my takeaway from a memo released by the CFPB yesterday.

Using less subtlety than Donald Trump at a press conference, the Bureau that Never Sleeps released a compliance bulletin stressing that it is deeply concerned about the repeated use of marketing agreements that violate RESPA’s ban on kickbacks in return for mortgage business. In the memo, it stresses that it has discovered repeated instances of marketing agreements being used to circumvent RESPA’s ban.

Anyone involved with a marketing agreement would be well advised to make sure that it is complying with the law both on paper and in practice. As the Bureau explains, “any agreement that entails exchanging a thing of value for referrals of settlement service business involving a federally related mortgage likely violates RESPA whether or not an MSA or some related arrangement is part of the transaction.” As a result, it is not enough to simply have a marketing agreement in place, you have to be able to demonstrate that it does not result in payments for work not performed or otherwise tied to the volume of business generated by the agreement.

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