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MSAs: Alive, Dead or on Life Support?

Jonathan Foxx
Sep 25, 2015

For some time, there has been been concerned about the borderline profiteering conducted by some compliance professionals in their effort to pick up a few extra bucks by providing information vital to mortgage loan originators. It seems that making money from their professional services is not enough. They need to charge hundreds of dollars for Webinars!

The most recent, egregious attempt to snatch at MLOs' wallets involves offering some insights about Marketing Services Agreements (MSAs). Hawking grisly scenarios of gloom and doom, these acquisitive Webinar purveyors attract prominent professionals, and, with them on board the Webinar gravy train, charge MLOs high fees for the privilege of hearing their baneful opinions by means of the Webinar broadcast. One Webinar host is charging nearly $450!

This is muck-up parading as mark-up!

The CFPB has expressed its view of MSAs under Section 8 of the Real Estate Settlement Procedures Act (RESPA). The Bureau issued a Consent Order in September 2014 against Lighthouse Title Inc., a Michigan title insurance agency, that had entered into a series of MSAs with various settlement service providers. 

The Consent Order: 

►Clarifies the Bureau's concerns regarding methods used in determining the payments under such agreements; and
►Raises troubling questions about how the Bureau interprets Section 8 of RESPA, since many of those interpretations seem to be at odds with guidance previously offered by the U.S. Department of Housing & Urban Development (HUD).

The Consent Order clarifies the Bureau's concerns regarding methods used in determining the payments under such agreements. The Consent Order also raises troubling questions about how the Bureau interprets Section 8 of RESPA, since many of those interpretations seem to be at odds with certain guidance previously offered by HUD.

MSAs have been a part of the industry for many years and the CFPB has not outlawed them at all, despite what you may have heard. Structured correctly, they are entirely legal!



Jonathan Foxx is president and managing director of Lenders Compliance Group, Brokers Compliance Group, Servicers Compliance Group and Vendors Compliance Group, national companies devoted to providing regulatory compliance advice and counsel to the mortgage industry. He may be contacted by phone at (516) 442-3456, by e-mail at jfoxx@lenderscompliancegroup.com or visit www.LendersComplianceGroup.com.