Anyone doubting that regulators are still focused on marketing services agreements need look no further than the HUD Audit and Consumer Financial Protection Bureau consent decree released recently. In the case of the HUD Audit, they found a mortgage company engaged in an impermissible marketing arrangement that violated section 8 of the Real Estate Settlement Procedures Act and the Department of Housing and Urban Development’s conflict of interest rules. The RESPA violation resulted from the fact that the agreement permitted and promoted the Realtor to literally put borrowers into a specific lender’s office, exclusive to other lenders. The conflict of interest was premised on the agency’s conclusion that the agreement was with a Realtor office, run by a principal, who was the lender’s branch manager.
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