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Misunderstanding MSAs Could Cost You a $1 Million

Bubba Mills
Dec 01, 2015

Let’s get right to it shall we? Do you want to avoid $1 million in fines? That’s exactly what I thought … keep reading.

The topic today is MSAs–Marketing Service Agreements, and if you do them wrong, you could end up facing that kind of fine. When it comes to MSAs today, things are getting serious.

First, an MSA is a relationship between a mortgage broker and a real estate broker, a title company or a home warranty company where the mortgage broker agrees to market the services of one of those entities for a fee. It might go like this: One of those companies pays you, say, $3,000 a month if you include their information in your marketing materials or ads. So far, no problem. These agreements are fine and they’re permitted under the Real Estate Settlement Procedures Act (RESPA).

The problem occurs when a mortgage broker gets greedy and makes several of these agreement with those different entities—basically reducing its marketing spend to zero—or worse, actually entering these MSAs as a way to make money.

Attorneys say it’s imperative to make sure that the relationship between the mortgage broker and the title or real estate company is not tied to sales or productivity. They say valuing the marketing services that the mortgage broker is performing is essential to analyzing whether the agreement complies with RESPA. Overvaluation can lead to serious penalties from the Consumer Finance Protection Bureau (CFPB).

In fact, those prosecutions by CFPB for RESPA violations are on the rise. Yes, it appears MSAs are squarely in the CFPB’s crosshairs. And the CFPB may fine companies up to $5,000 a day for violating RESPA. If the violation was reckless, those fines can jump to $25,000 a day. And if a company knowingly violates or ignores the provisions, the CFPB can levy fines up to $1 million a day.

If you’re a broker and your mortgage office has an MSA with a title company, let an attorney look it over to ensure it complies with RESPA. It’s better to spot a problem and fix it before the CFPB gets involved.

In the meantime, here are some key points attorneys say to remember about MSAs:

Offer only advertising and/or marketing. In an MSA, the mortgage broker is essentially being hired to advertise the services of the other entity, so limit your services to advertising—nothing else.

Keep payments proportionate. If your MSA is between two parties, then each party need to pay its proportionate amount of marketing expenses—each needs to pay 50 percent. If you bring in a third party, then break the payments into thirds.

Value your marketing services objectively. Sharing ad space and passing along prorated advertising costs to a partnering company are aspects of MSAs that are easy to value. But email campaigns or other generic marketing services are tougher to value. Experts say hire an auditing firm to offer objective values of marketing services.

Track services. If a mortgage broker is being paid for services it’s not performing, that’s a RESPA violation. Create a way to measure services rendered objectively so that both the mortgage broker and the company paying for the services can track what’s being done.

Bubba Mills is executive vice president of Corcoran Consulting & Coaching Inc. He may be reached by phone at (800) 957-8353 or visit

This article originally appeared in the September 2015 print edition of National Mortgage Professional Magazine.

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