Marketing Services Agreements:

Transcription

1 Marketing Services Agreements: To Proceed or Not to Proceed? Rick Accomazzo Murr Siler & Accomazzo, P.C. (303)

2 RESPA Section 8(a) No person shall give and no person shall accept any fee, kickback, or thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or a part of a real estate settlement service shall be referred to any person.

3 RESPA Section 8(c) Nothing in this section shall be construed as prohibiting the payment to any person of a bona fide salary or compensation or other payment for goods or facilities actually furnished or for services actually performed.

4 Lighthouse Title Marketing Services Agreement as defined by the CFPB in Lighthouse Title: a provider of settlement services (lender) agrees to pay any thing of value to a person in a position to refer a settlement service (real estate broker) in exchange for marketing or advertising services, includes an agreement that allows a lender to market or promote its services to a real estate broker or its employees or agents, OR an agreement that requires a real estate broker or its employees or agents to endorse the lender, OR an agreement where a real estate broker is to market the lender s services, OR an agreement to include references to the lender in any advertising placed by the real estate broker. An agreement for mass advertising for consumer consumption by a person who does not provide settlement services (e.g., an agreement to place an advertisement in a newspaper or magazine or on a television or radio station) is not a marketing services agreement unless the person also endorses the provider.

5 RESPA: Thing of Value The term thing of value includes any payment, advance, funds, loan, service, or other consideration.

6 Lighthouse Title Entering a contract is a "thing of value" within the meaning of Section 8, even if the fees paid under that contract are fair market value for the goods or services provided.

7 Lighthouse Title Repeated payments "connected in any way with the volume or value of the business referred... [are] evidence that [the payments are] made pursuant to an agreement or understanding for the referral of business. A fair market value for goods or services is based only on the value of the goods or services in and of themselves and cannot include any consideration of the value of any referrals of business incident to or a part of real estate settlement services related to federally related mortgage loans.

8 Principles to Lessen MSA Risk Don t pay for exclusive or preferred lender status. Don t pay based on the number of referrals received from the real estate broker. Less risky if you can demonstrate the fee paid is commensurate with the market value of the services (for example, via independent third party).

9 Principles to Lessen MSA Risk, Cont. Less risky if you audit to make sure that the marketing and advertising services for which you are paying have actually been provided each month. Less risky if payment is for advertising to the customers of the real estate broker through the real estate broker s website or publication. Less risky if advertisements contain a Paid Advertisement disclosure.

10 Principles to Lessen MSA Risk, Cont. Less risky if payment is for joint mass advertising (for example, splitting the cost of a newspaper advertisement) as long as each party bears a proportionate cost of the advertisement. Less risky to have customers of the real estate broker contact the mortgage lender directly, rather than through the real estate broker.

11 Principles to Lessen MSA Risk, Cont. Very risky if the lender appears to be paying for the real estate broker s endorsement or recommendation. Very risky if arrangement is exclusive. Very risky if the lender appears to be paying to market their services to the real estate brokers themselves, who may then refer customers to the lender.

12 QUESTIONS?