In the heavily-regulated business of residential real estate, can a service provider legally offer discounts? A recent consent order from the Consumer Financial Protection Bureau gives some insight into what sort of discounts to avoid.
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The impact of a long-awaited court ruling involving PHH Corporation is still reverberating throughout the real estate industry. The decision could radically change the way the Consumer Financial Protection Bureau (CFPB) enforces the Real Estate Settlement Procedures Act (RESPA). Because the opinion is so potentially far reaching, we will discuss it in two separate posts. In this first one, we will consider what it means for the CFPB to be unconstitutional.
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In a federal court of appeals in Washington D.C. last week, an epic battle played out over the constitutionality of the Consumer Financial Protection Bureau (CFPB). The case concerns a $109 million administrative judgment against PHH Corporation over its alleged receipt of kickbacks in connection with mortgage insurance. The presiding judges were openly skeptical of the CFPB’s structure and the power of its sole director, Richard Cordray. Their skepticism could result in a ruling that renders the entire agency, and all of its acts, unlawful.
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This past week, a federal court in Maryland largely rejected arguments from various lenders and real estate companies seeking to dismiss a lawsuit involving the now-defunct title agency, Genuine Title, LLC. That lawsuit continues the efforts of federal and state regulators to crackdown on entities that did business with Genuine Title. The ruling offers several teaching moments.
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The results of a recent poll, commissioned by the National Association of Realtors (NAR), show that not only have real estate consumers grown comfortable with affiliated business arrangements but also that lots of clients prefer them. That might encourage doubting real estate companies to rethink their current stances about those sorts of arrangements.
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Last week, the New York Times ran a series of three front-page articles blasting the recent trend of various industries to put arbitration clauses, some with class-action waivers, in consumer contracts. Anyone looking for a balanced view of arbitration should look elsewhere. A flurry of critics—from bloggers, to law professors, to Forbes magazine, to the U.S. Chamber of Commerce—quickly and properly hammered the Times for its remarkably slanted approach.
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On October 8, 2015, the Consumer Financial Protection Bureau (CFPB) offered long-awaited guidance about its “grave concerns” over marketing services agreements (MSAs), which usually involve payments among different companies for advertising or promotional services. While those agreements are not automatically illegal, making them compliant with the Real Estate Settlement Procedures Act (RESPA) is exceedingly complex and nearly impossible, the agency said. So, if MSAs were on life support before, they have now flat-lined and the gurney is being wheeled out.


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