The CFPB on MSAs: Consider Yourself Warned
By: Holly Spencer Bunting, Phillip L. Schulman
Settlement service providers have been begging the Consumer Financial Protection Bureau (“CFPB”) for regulatory guidance regarding marketing services agreements (“MSAs”) under Section 8 of the Real Estate Settlement Procedures Act (“RESPA”). Yesterday, they got it − sort of. After months of the industry deciphering enforcement actions in an attempt to gauge whether the CFPB believes MSAs between settlement service providers are legal under RESPA, the CFPB issued Compliance Bulletin 2015-05 (“Bulletin”) regarding “RESPA Compliance and Marketing Services Agreements.” But, the Bulletin neither answers the legality question nor provides clear guidelines on what can and cannot be done in an MSA. Rather, the Bulletin, as stated by the CFPB, “describe[s] the substantial risks posed by entering into [MSAs].” It is safe to say this is not the kind of guidance the industry was looking for.