While exclusivity provisions in
In an exclusive MSA, a real estate agent (or other settlement service provider) agrees to provide marketing services exclusively on behalf of one lender. Even though an exclusivity provision is not a per se referral, the inherent nature of the exclusive relationship incentivizes MSA partners to directly refer consumers to the lender MSA partner. In practice, that real estate agent will only be marketing the services of one lender to the realtor’s consumer market share, which exponentially increases the ability for that realtor to directly steer a consumer into using the lender MSA partner. Because of this, regulators construe the MSA fees being paid by the lender to the MSA partner as being in exchange for those referrals, in violation of RESPA section 8, and not in exchange for the contractually outlined bona fide marketing services permitted under RESPA.
This issue is further implicated where a real estate agent (or other settlement service provider) provides direct marketing services on behalf of a lender MSA partner. For example, the real estate agent may personally hand out a specific loan officer’s business card to a consumer. This creates an inherent incentive to steer and refer a consumer to a specific lender. There is further an inability to police the practical implementation of such direct marketing services to ensure the borrower that no verbal interaction creates the impression that a particular lender is required in violation of RESPA.
The bottom line is that regulators examine practical realities in implementation of MSAs, such that direct marketing and exclusivity are problems to avoid.
