Marketing Services Agreements

One of the popular buzzwords these days is disruption. For example, Zillow came along and, through the aggressive marketing of leads, disrupted the ways in which many mortgages were originated. According to some reports, the Consumer Financial Protection Bureau is now disrupting Zillow’s tactics. Lead purchasers can protect themselves in several ways.
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For the past several years, Prospect Mortgage, LLC, has weathered a blast furnace of regulatory heat due to its aggressive marketing efforts, which some have called kickbacks. Last week, the company entered into a consent order with the Consumer Financial Protection Bureau that serves as a useful guide for other real estate businesses.
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The infamous marketing arrangement run by Genuine Title, LLC, a now-defunct title company from Maryland, has ended up where we all expected: in a certified class action. All the lender defendants except one settled the lawsuits against them. The lone holdout, West Town Bank & Trust, ignored a few critical defenses and learned its lesson the hard way.
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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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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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