CFPB Updates Rules on Marketing Service Agreements

Housing Finance

The Consumer Financial Protection Bureau (CFPB) on Oct. 7 rescinded a 2015 bulletin that obscured the compliance requirements for marketing service agreements.

As it relates to home building, marketing service agreements usually involve an arrangement in which a builder performs certain promotional services on behalf of a lender. In turn, the builder expects the lender to provide builder-provided referrals with a full line of competitive products and a commitment to providing excellent customer services. The lender then pays the builder an agreed-upon recurring fee for marketing and advertising services.

Builder affiliate relationships involve a mortgage company or settlement service provider that is a wholly owned subsidiary of a builder.

Marketing service agreements and builder affiliate relationships provide builders with cost savings and increased efficiencies in the settlement process.

The CFPB said it determined that the 2015 bulletin "does not provide the regulatory clarity needed on how to comply with [the Real Estate Settlement Procedures Act] and Regulation X and therefore is rescinding it."

For more information, contact Curtis Milton at 202-266-8597.

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