Marketing Services Agreements: Co-Marketing and RESPA

MSAs:

Marketing Services Agreements

Co-Marketing

MSAs: Marketing Services

Agreements

C-10132

CE Forward, Inc.

S-1655

Jillayne Schlicke

I-0651

Welcome!

Please complete your sign-in sheet

Cell phones and laptops off while class is in

session.

I-pads okay

Breaks

Bathrooms

Coffee

Water

Agenda

MSAs: Marketing

Services

Agreements

~

Co-Marketing

C-10132

IntroductionsBoundariesRESPA Section 8Dodd Frank-QMsSwitch from AfBAs to MSAs and Co-Marketing

Federal and State Law

Lighthouse Title

Preferred lender

Zillow

Lead Generation

Case Studies QuizEvaluationsCertificatesClose

Objectives

Understand the reason why we switched from Affiliated Businesses to MSAs and how Co-Marketing agreements may or may not violate RESPA.

Boundaries

MSAs/RESPA

Policy

Time

Law

Section 1: MSAs:

Preferred Vendor

In-House Lender

Preferred Lender

Joint Venture

Co-advertising

Co-marketing

Section 1: Small Group

Assignment

Introduce yourself to the people in

your small group.

What kind of MSAs are you seeing

out there?

What do you want to learn today?

What do you want to learn today?

*

RESPA Section 8

We are not suppose to give or receive

an item of value in exchange for a

referral on a Federally-related loan.

All entities that earn a fee on a federally-

related loan are subject to Section 8

anti-kickback provisions of RESPA.

The Dodd Frank Act requires lenders to

include the profit from their affiliated

businesses in the 3% fee limit charged

to the consumer in Box A (Loan Costs)

of the Loan Estimate. If a lender

charges more than 3% in Box A, the

loan is not considered a Qualified

Mortgage. So lenders and builders

dismantled their affiliated businesses in

2014 and replaced them with MSAs.

Three types of loans

Loans that

conform to

Fannie

Freddie

FHA/VA/

USDA

Points/fees

limited to 3%

Home

Owner

Equity

Protection

Act

“high cost”

VERY expensive

Qualified Mortgages HPML HOEPA

Higher Priced

Mortgage Loans

Subprime

Non traditional

Non standard

Non prime

“Non-QM”

Section 2: Federal Law

A Marketing Services Agreement (MSA)

consists of a settlement service provider,

such as a mortgage company

approaching another settlement service

provider, such as a real estate broker, to

perform marketing services in exchange

for regular fees that are not directly

based on volume of business.

Section 2: State Law

A violation of federal law is a violation of state law. From the WA State Real Estate Course Book, page 11:

RCW 18.85.361 Real Estate Brokers and Managing BrokersDisciplinary action—Grounds.

(19) In the case of a broker or managing broker, acceptance of a commission or any valuable consideration for the performance of any acts specified in this chapter, from any person, except the licensed real estate firm with whom the broker or managing broker is licensed;

(20) To direct any transaction involving his or her principal, to any lending institution for financing or to any escrow company, in expectation of receiving a kickback or rebate therefrom, without first disclosing the expectation to his or her principal

Large or small group discussion:

Does number (19) cover the anti-kickback provision of RESPA?

Number (20) seems out of date. If kickbacks or rebates from lenders and escrow companies to real estate brokers are prohibited under federal law, this seems to suggest that kickbacks are allowed if disclosed.

RCW 18.86.040 and 18.86.050

“A duty to timely disclose to the buyer or seller any conflicts of interest”Are marketing services agreements a conflict of interest?

Violations of Section 8's anti-kickback, referral fees and unearned fees provisions of RESPA are subject to criminal and civil penalties.

In a criminal case a person who violates Section 8 may be fined up to $10,000 and imprisoned up to one year.

In a private law suit a person who violates Section 8 may be liable to the person charged for the settlement service an amount equal to three times the amount of the charge paid for the service.

Section 3: Case Study

Lighthouse Title

Read the consent order.

In your small group, discuss the three

questions. Elect a group leader and share

your answers with the rest of the class.

Section 4: Best Practices

Analyzing an in-house or “preferred” lender

co-marketing agreement:

Something of value

Referrals

An agreement (quid pro quo)

Section 4: Best Practices

Zillow Co-Marketing

Does the Zillow Co-Marketing program

appear to comply with RESPA?

What does Zillow’s terms of service say

about this?

Section 5: Best Practices

Zillow Co-Marketing

How can a real estate broker and a lender

enter into a co-marketing program that

supports compliance with RESPA?

Section 5: Best Practices

Zillow Co-Marketing

Something of value

Referrals

An agreement (quid pro quo)

Section 5: Facebook Ads

Home Scouting

Boomtown

What do you think about the ad content and

the interplay between the Realtor and the

consumer?

Section 7: Case Studies

Case Study 1. Applied Professional Ethics

Case Study 2. Husband and Wife

Case Study 3. Partnering with Non-Profits

Case Study 4. Sharing the cost of print

marketing

Section 8: Quiz

Rules:1) Jillayne’s quizzes are always only for fun

2) True/False = 50% chance of being right!

3) Small group quiz = okay to work in groups

4) Open book = Answers might be in the

handouts

5) But they also might not be in the handouts so

guessing is cool!

Recap

The industry has a new regulator of

RESPA: The Consumer Financial

Protection Bureau. The CFPB has issued

a warning memo on MSAs.

Proceed with caution.

Do not rely on a commissioned

salesperson’s assertions that their

marketing services agreement is:

Perfectly legal

Been reviewed by attorneys

Worry-free.

Recap, Certificates, Evals, Close

Any remaining questions?

Will upload questions, answers and links to the

website CEForward.com

Please do not lose your certificates

THANK YOU!

Evals: Please write a narrative description

about your experience in class