How Buying Leads Could Infringe on RESPA

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Lenders should exercise caution when purchasing leads to ensure that they are not actually paying for referrals as prohibited by the Real Estate Settlement Procedures Act.

The purchase of leads is an acceptable practice so long as the leads do not constitute referrals. The Department of Housing and Urban Development permitted lenders to purchase lists of prospects. Likewise, to date, the Consumer Financial Protection Bureau has not prohibited this practice. Nevertheless, RESPA, as enforced by HUD and the CFPB, prohibits compensation of referrals in connection with a mortgage loan. A referral is defined by RESPA as the payment for a list of customers when the person selling the leads does not in any way affirmatively influence the consumer’s selection of a settlement service provider.

Lenders may not pay for any other person to affirmatively influence a particular customer to select them as a lender. If lenders purchase leads from another company, they should ensure that their payment is not contingent on an endorsement of the lender’s services in connection with customers’ particular transactions.

While purchasing leads that are not contingent on referrals does not violate RESPA, lenders should also confirm that purchasing customer lists does not violate privacy regulations, including, but not limited to, the Gramm-Leach-Bliley Act. 

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Compensation Originations Compliance