Concerns about recent regulatory interpretations of the Real Estate Settlement Procedures Act have prompted two lenders to abandon marketing services agreements.
On Thursday, Wells Fargo Bank, N.A., announced that it would withdraw from mortgage marketing services and desk-rental agreements with real estate firms, builders and other referral sources.
The bank, which is based in
Sioux Falls, South Dakota, said the decision was prompted by increasing uncertainty surrounding regulatory oversight of these types of arrangements.
In addition, simplifying the mortgage process was also listed as a factor.
The decision goes into effect on Aug. 1, and the wind down is expected to be completed within 90 days.
No impact is expected to the lender’s origination volume.
Back in 2013, parent Wells Fargo
& Co. disclosed plans to exit its joint venture alliances. That move resulted in the closing of Edward Jones Mortgage LLC.
At the time, Wells Fargo said the decision followed a “careful analysis of marketing conditions and the impact of the regulatory environment on business.”
Also announcing
its abandonment of marketing services agreement arrangements today was Prospect Mortgage LLC.
Sherman Oaks, California-based Prospect said the exit is expected to be completed by the end of September.
“Recent interpretations of Real Estate Settlement Procedures Act requirements introduce substantial uncertainty as to the rules and requirements applicable to MSAs,” the announcement said. “Prospect has taken every precaution to ensure that it is complying with the rules and guidance under applicable law.
“However, in light of these recent rulings, Prospect believes that MSAs are no longer a viable marketing tool for the industry.”
Alleged RESPA violations from reinsurance
payments made by property insurers and title insurers to lenders have led to several settlements over the last couple years — including a settlement earlier this year between Wells Fargo and the Consumer Financial Protection Bureau.
The recent increase in RESPA actions reflects the handing over of RESPA enforcement from the Department of Housing and Urban Development, which — under the George W. Bush administration as well as prior administrations — had rarely taken action, to the far more rigid CFPB.
