RESPA

October 7, 2020

Consumer Financial Protection Bureau issues Compliance Aid on RESPA Section 8: Marketing Service Agreements (MSAs)

Today, the Consumer Financial Protection Bureau (CFPB) announced it has rescinded the highly controversial Compliance Bulletin 2015-05, “RESPA Compliance And Marketing Services Agreements” and issued new the Real Estate Settlement Procedures Act (RESPA) guidance on Section 8 on the topics of “Gifts and Promotional Activities” and “Marketing Services Agreements“. The rescission of Compliance Bulletin 2015-05 clears up the widespread confusion that former CFPB Director Richard Cordray created when he issued the MSA bulletin. The CFPB’s Brian Schneider wrote the “CFPB provides clearer rules of the road for RESPA marketing service agreements” on the Bureau’s blog “[I]n order to provide clearer rules of the road and promote a culture of compliance, the Bureau is publishing guidance in the form of Frequently Asked Questions (FAQs) on the RESPA Section 8 topics. The FAQs provide an overview of certain provisions of RESPA Section 8 and respective Regulation X sections, and addresses the application of certain provisions to common scenarios described in Bureau inquiries involving gifts and promotional activities, and marketing services agreements (MSAs).”

Schneider wrote “the Bureau determined that Compliance Bulletin 2015-05, Compliance and Marketing Services Agreements, does not provide the regulatory clarity needed on how to comply with RESPA and Regulation X and therefore is rescinding it. The Bureau’s rescission of the Bulletin does not mean that MSAs are per se or presumptively legal. Whether a particular MSA violates RESPA Section 8 will depend on specific facts and circumstances, including the details of how the MSA is structured and implemented. MSAs remain subject to scrutiny, and we remain committed to vigorous enforcement of RESPA Section 8.”

One of the biggest takeaways in the MSA guidance is in the Bureau’s use of a real estate agent entering into a MSA agreement with a lender. In the past MSAs where lenders entered into MSAs with individual real estate agents or real estate teams was considered off limits due to the direct consumer interaction that real estate agents and real estate agent teams had so MSAs were largely limited to real estate brokerages since this was seen as a business to business arrangement due to the brokerages limited interaction with consumers.

February 15, 2020

Marx Sterbcow speaking at the Minnesota Land Title Association Spring Seminar

by Marx Sterbcow

Marx Sterbcow will provide a “RESPA Compliance and CFPB Update“ at the Minnesota Land Title Association “MLTA” 2020 Spring Conference at the Marriott Minneapolis Northwest hotel on Monday, April 6, 2020 from 10:15 to 11:15 AM. The session will first focus on the “Do’s and Don’ts of the Real Estate Settlement Procedures Act (RESPA)” covering such topics as marketing services agreements, affiliated business arrangements, real estate lead generation program compliance, referrals and gifts. The second part of the presentation will discuss the latest in Consumer Financial Protection Bureau “CFPB” enforcement trends and outlook for the coming year.

February 14, 2020

Sterbcow Law Group’s Marx Sterbcow to speak at Real Estate Services Providers Council (RESPRO) Annual Conference

by Marx Sterbcow

Sterbcow Law Group’s Managing Attorney, Marx David Sterbcow, will speak at the 2020 27th Annual Real Estate Services Providers Council, Inc. “RESPRO” Conference in Phoenix, Arizona on April 24, 2020. The RESPRO27 will be held at the Tempe Marriott at the Buttes. The presentation “Top Down Affiliated Business Arrangement “AfBA” Compliance Demands: The Impact of Principal and Client Compliance Demands on AfBAs and Other Recent Developments” will focus on the rapidly changing terrain of AfBA compliance demands originating from sources other than the government and the practical ramifications for adopting some of these demands into your affiliated business.

The seminar will discuss the benefits of having third parties Audit your affiliated business for Real Estate Settlement Procedure Act “RESPA” compliance based on new and evolving compliance expectations from banks, non-bank lenders, title insurance underwriters, and government regulators. Joining Marx will be Trip Riley with Saul Weing, Arnstein & Lehr and Charles Cain with WFG National Title.

For more information on RESPRO27

December 14, 2019

FDIC RESPA Enforcement Action: HomeStreet Bank accused of violating Section 8

by Marx Sterbcow

The Federal Deposit Insurance Corporation “FDIC” on November 30, 2019 entered into a Consent Order FDIC-18-0142k which ordered HomeStreet Bank, a Seattle, Washington based bank to pay a civil money penalty of $1.35 million dollars. The FDIC alleged that HomeStreet Bank’s now discontinued Home Loan Center-based mortgage banking business line violated Real Estate Settlement Procedures Act, 12 U.S.C. § 2607, and its implementing regulation, Regulation X, 12 C.F.R. Part 1024, by entering into certain co-marketing agreements using online platforms and desk rental agreements which resulted in the payment of fees to real estate brokers and home builders for their referrals of mortgage loan business. The FDIC also stated that all of HomeStreet Bank’s agreements with those real estate brokers and home builders have been terminated.

The FDIC’s Consent Order stated that HomeStreet Bank entered into the settlement without admitting or denying any charges of unsafe or unsound banking practices or violations of law or regulation.

Unfortunately though, the FDIC’s Consent Order did not provide any industry guidance on what it found objectionable in the co-marketing agreements using online platforms or the desk rental agreements. The Sterbcow Law Group hopes the FDIC will in the future provide more detail in its enforcement actions in order to help provide more clarity to the real estate and mortgage industry.

June 8, 2019

Compliance Conference: Marx Sterbcow to speak at the 2019 National Settlement Services Summit “NS3” conference in Phoenix, Arizona

by Marx Sterbcow

Marx Sterbcow, Managing Attorney for the Sterbcow Law Group, and Sean Burke, Partner at Mattingly Burke Cohen & Biederman, have been selected to present at October Research Corporation’s 2019 National Settlement Services Summit conference “NS3” at the Waldorf Astoria’s Arizona Biltmore Resort in Phoenix, Arizona on Tuesday, June 18th from 3:10-4:00 PM. The presentation titled “Title Insurance Compliance Management Systems for Tomorrow” will focus on technological expectations the Consumer Financial Protection Bureau “CFPB” expects many settlement service providers to have in place in today’s environment. The presentation will discuss how regulators are not satisfied with manual processes for compliance monitoring anymore and why the use of automated compliance management overlay technology systems is a tool that regulators like from a compliance standpoint but also how this technology will benefit companies who use it as well.

Marx Sterbcow will also join Richard Horn, Partner with Garris Horn PLLC and Sean Burke, on Thursday, June 20, 2019 as part of NS3’s “Ask The Experts” round table where they will provide insight on the latest “Regulatory and Enforcement Issues” on the federal and state level in the title & mortgage industry. This presentation will take place in the Frank Lloyd Wright Ballroom. The NS3 Conference is widely considered one of the premier compliance conferences in the title, mortgage, and settlement services industry.

October Research Corporation has generously offered a Discount Code to attend NS3 for all friends and clients of the Sterbcow Law Group. To receive your Discount Code please contact the Sterbcow Law Group and we will send you the special discounted rate code to attend NS3.

March 22, 2019

RESPA Seminar: Marx Sterbcow to discuss “Whither the Bureau: State UDAAP, Regulatory and Private Sector Compliance Issues, Activities and Requirements” at the 26th Annual RESPRO Conference in New Orleans on March 27, 2019

by Marx Sterbcow

Marx Sterbcow with the Sterbcow Law Group’s RESPA Law Resource Center has been invited to speak at the Real Estate Settlement Providers Organization’s “RESPRO” 26th Annual Conference in New Orleans, Louisiana on March 27, 2019 at 8:45 AM at the Ritz Carlton Hotel’s Carrollton Ballroom. The presentation “Whither the CFPB: State Unfair Deceptive Abusive Acts Practices, Regulatory and Private Sector Compliance Issues, Activities and Requirements” will review the most recent federal and state mortgage, title insurance, and real estate brokerage regulatory actions.” The session will discuss how the Consumer Financial Protection Bureau and various state mortgage and title insurance regulatory agencies are interpreting UDAAP/RESPA. The session will also discuss what compliance expectations the CFPB’s Enforcement division will have when a company is under investigation and the general outlook of what is going on or not going on at the CFPB. The presentation will hit on issues involving private sector mortgage lending compliance involving Affiliated Business Arrangements and those how those expectations extend to class action mitigation risks.

Charles “Chuck” Cain from Cincinnati, Ohio (Executive Vice President Agency at WFG and Of Counsel to the Sterbcow Law Group) and Francis “Trip” Riley from Princeton, New Jersey (Partner with Saul Ewing Arnstein & Lehr, LLP) will co-present with Mr. Sterbcow in this session.

January 12, 2019

Marx Sterbcow to speak at the American Land Title Association’s Large Agent Conference

by Marx Sterbcow

Marx Sterbcow of the Sterbcow Law Group has been invited to speak at the American Land Title Association’s “ALTA Large Agent Conference at the Boca Raton Resort & Club in Boca Raton, Florida on Tuesday, January 15, 2019. ALTA’s Large Agent Conference is January 13-15, 2019.

The presentation “RESPA UPDATES” will discuss a variety of topics from the latest on RESPA Enforcement by the Consumer Financial Protection Bureau “CFPB” to how the new political landscape in Washington, D.C. may put the CFPB’s current enforcement ideology in the spotlight. The presentation will also provide the latest RESPA Best Practices tips involving: advertising services agreements & marketing agreements, co-branded website advertising, advertising & marketing practices, title agency affiliated business arrangements, title joint ventures, office leases, and the challenges involved with many lead generation programs. Craig Haskins, the Chief Operating Officer, of Knight Barry Title, Inc. headquartered in Wisconsin will moderate the RESPA UPDATES session.

March 22, 2018

Marx Sterbcow to speak at the 2018 RESPRO Annual Conference on “CFPB Enforcement and Title Technology Monitoring Expectations for Affiliated Business Arrangements”

by Marx Sterbcow

Marx Sterbcow, the Managing Attorney for the Sterbcow Law Group LLC, has been invited to speak at the 2018 RESPRO 25th Annual Conference in Phoenix, Arizona. The session titled “CFPB Enforcement and Technology Monitoring Expectations for Affiliated Business Arrangements” is scheduled for 9:00-10:00 AM on April 11, 2018. This presentation will discusses how a new technology oversight compliance software reporting tool helps RESPA governed Affiliated Businesses Arrangements “AfBA” stay compliant based on the Consumer Financial Protection Bureau’s Meridian Title Consent Order. The session co-presented with Francis “Trip” Riley, Partner at Saul Ewing, and will be moderated by Charles “Chuck” Cain, EVP WFG National Title Insurance Company and Of Counsel to the Sterbcow Law Group. Marx Sterbcow and Trip Riley are two members of the Meridian Title legal team who were involved in representing Meridian Title in connection with the CFPB Consent Order.

The presentation will provide critical information which all affiliated businesses should be aware of as it pertains to the monitoring of AfBA disclosure forms in real time. In addition we will discuss how the use of this new technology also adds operational value to any companies operational compliance and business development needs. We will explain how the CFPB Enforcement division views this type of technology monitoring as a critical piece for all settlement service companies, especially those in the title industry, as a new expectation for medium to large-sized companies to adopt. We will provide an in-depth look into how a growing number of title agencies across the United States are already utilizing this title production overlay software compliance and business intelligence technology, and how this technology will help companies stay RESPA compliant, and what the future holds for these types of applications as they enter the marketplace.

To Register for the 25th Annual RESPRO Conference click here

November 15, 2017

CFPB Director Richard Cordray Announces His Resignation

by Marx Sterbcow

The Consumer Financial Protection Bureau (CFPB) Director Richard Cordray, announced today in an email to CFPB employees that he will be stepping down as the Director at the end of November. It is widely expected that Richard Cordray will run for Governor of Ohio but he did not address his future in the email he sent to his employees.

Who will replace Richard Cordray is a huge question because of President Donald Trump will likely face a hostile audience by Democrats and some Republicans in getting a new Director appointed and confirmed. If the Trump Administration pushes someone who wants to gut the CFPB it could haunt the Republicans politically because the agency is highly popular with consumers. The process with likely take several months to appoint and confirm a new CFPB Director although the Trump Administration could pick an Interim Director in accordance with the Federal Vacancies Reform Act (FVRA). The Interim Director would be in charge of the CFPB until a potential nominee was confirmed by the Senate. The FVRA process is not new to the CFPB because prior to Richard Cordray’s confirmation the CFPB was overseen by Treasury Secretary Timothy Geithner until Cordray’s confirmation.

The CFPB under Director Richard Cordray’s leadership over $12 billion in relief was recovered for nearly 30 million consumers. His departure could likely spell the end of his “Regulation by Enforcement” and usher in a period of more written guidance to the industry. However, the “Regulation by Enforcement” agenda has recently been minimized due to a smaller number of enforcement personnel and fewer resources given to that division while he led the CFPB.

April 15, 2017

MARX STERBCOW TO PRESENT AT 2017 RESPRO ANNUAL CONFERENCE

by Marx Sterbcow

Marx Sterbcow, Managing Attorney, of the Sterbcow Law Group will present in two sessions at the 2017 Real Estate Service Providers Council “RESPRO” Annual Conference at the Bellagio Hotel in Las Vegas, Nevada on April 19, 2017. The RESPRO Conference is from April 18-20, 2017.

The first session “Unfair Deceptive Abusive Acts Practices UDAAP: The Cloud Still Hangs Low” is from 1:30 PM– 2:30 PM in the DaVinci 3 Ballroom. Mr. Sterbcow is co-presenting with Francis (Trip) Riley with Saul Ewing. The presentation will focus on how UDAPP will continue to effect CFPB’s actions on settlement service providers and how RESPA regulated Affiliated Business Arrangements (AfBAs) need to be cognizant of their marketing and advertising efforts. We will address cases of interest and suggest tips that every company should incorporate.

The second session “RESPA: Stretching the Envelope on Prohibited Referrals” is from 2:45 PM – 3:45 PM in the DaVinci 3 Ballroom. Mr. Sterbcow is co-presenting with Stan Gordon with Gordon & Associates and Francis (Trip) Riley with Saul Ewing. The presentation will focus on the basic parameters of what is prohibited referral activity have expanded under CFPB which has resulted in a chilling effect on the financial settlement service industry. The ambiguity in RESPA on defining a referral and the perceived risks in marketing activities in various circumstances will be discussed. The presentation will provide some clarifications on when an endorsement of a service provider becomes a prohibited referral. The session will also address whether it is a violation of Section 8 for a nationwide real estate brokerage group to promote a service provider throughout its owned or affiliated companies to their management and sales agents. How considerations under PHH and RESPA exception Section 8(c)(2) need to be considered and is the exception absolute as implied by the current ruling.