Industry Update: the Future of eClosing and RON

Join industry experts for an in-depth discussion on the future of eClosing and how hybrid and RON closings benefit lenders and borrowers.

DOJ v. NAR and the ethics of real estate commissions

Today’s HousingWire Daily features the first-ever episode of Houses in Motion. We discuss the Department of Justice’s recent move to withdraw from a settlement agreement with the NAR.

Hopes for generational investment in housing fade in DC

Despite a Democratic majority, the likelihood of a massive investment in housing via a $3.5 trillion social infrastructure package appears slim these days. HW+ Premium Content

How Biden’s Neighborhood Homes proposal impacts real estate investors

Dubbed the Neighborhood Homes Tax Credit, the proposal is part of the larger American Jobs Plan legislation — also known as Biden’s infrastructure plan. Here's a look into how it impacts real estate investors.

Politics & MoneyMortgageReal Estate

CFPB, regulatory concerns drive Bank of America out of MSAs

Megabank joins Wells Fargo, others in discontinuing marketing agreements

Citing “recent regulatory developments,” Bank of America (BAC) will become the latest lender to discontinue its use of marketing services agreements.

Bank of America Senior Vice President Terry Francisco confirmed to HousingWire that Bank of America will discontinue its marketing services agreements by Nov. 1.

Francisco also said that Bank of America is going to terminate its space rental agreement programs in accordance with the terms of each agreement.

“While the decision to wind down our MSA and SRA programs was difficult, the end of these programs allows us to pursue different ways we might help builders and Realtors provide superior service and financing solutions for their customers,” Francisco said.

Bank of America is not the first lender to stop using MSAs, and it appears they won’t be the last one out the door either.

In July, Wells Fargo (WFC) and Prospect Mortgage each announced decisions to discontinue MSAs.

Both pointed to recent interpretations of Real Estate Settlement Procedures Act requirements, with Prospect saying they introduce substantial uncertainty to the rules and requirements applicable to MSAs.

Wells said the decision was made as a result of “increasing uncertainty surrounding regulatory oversight of these types of arrangements” and as part of Wells Fargo’s ongoing efforts to simplify the process that customers experience as they weigh all of their choices when shopping for a mortgage.

Recently, the Consumer Financial Protection Bureau signaled that it is going to look even closer at MSAs.

Last week, the CFPB issued a compliance bulletin on MSAs, telling the mortgage industry that it has “grave concerns” about potential violations of RESPA presented by MSAs.

It was the second such warning issued by the CFPB in the last few months.

After Wells Fargo and Prospect made their announcements, Samuel Gilford, spokesman for the CFPB, told HousingWire that the Wells Fargo’s exit from MSAs was an “important step” towards ensuring compliance with RESPA, adding that the CFPB is “concerned” about the legal risk that MSAs carry for the industry.

CFPB Director Richard Cordray echoed those statements this week.

“We are deeply concerned about how marketing services agreements are undermining important consumer protections against kickbacks,” Cordray said last week. “Companies do not seem to be recognizing the extent of the risks posed by implementing and monitoring these agreements within the bounds of the law.”

Following the release of the CFPB’s bulletin last week, the Mortgage Bankers Association warned its members to take the CFPB’s bulletin very seriously.

In a note sent to its members this week, the MBA said that it views the CFPB’s latest guidance on MSAs to be a “strong warning” that the industry needs to reconsider its usage of MSAs because the CFPB is closely monitoring the agreements.

“Coming as it does after enforcement and other actions by the CFPB on marketing services agreements, MBA believes that the (CPFB’s) bulletin is short on actual guidance, and can only be interpreted as a series of warnings to lenders against MSAs,” the MBA said in its note.

“The Bulletin is a clearly directed to mortgage lenders and warns of RESPA liability for involvement in MSAs,” the MBA said. “The Bulletin and the press release accompanying it are replete with warnings.”

Bank of America has apparently heard those warnings and decided that the risk of using MSAs now outweighs the agreements’ benefits.

Last one out the MSA door, don’t forget to turn out the lights.

Most Popular Articles

The housing market is losing steam

Mortgage applications for new home purchases decreased 3% from May and 23.8% year over year, suggesting buyer fatigue in the housing market.

Jul 20, 2021 By
3d rendering of a row of luxury townhouses along a street

Log In

Forgot Password?

Don't have an account? Please