The Demise of the MSA is Here

02/02/2017
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We think the CFPB has made it clear that the demise of the MSA is here.

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19 thoughts on “The Demise of the MSA is Here”

  1. Lee says:

    What about mortgage companies like veterans United ? They make the realtors kick them back 28% for any closed referrals and leads

  2. josh says:

    Are the the big builders and their affiliated mortgage and title companies in the crosshairs? How can they give “incentives” for using their companies and get away with it?

    1. Tim McConnell says:

      I would like to see a show on Builder Incentives and understand how the builders are apply to apply incentives to an inhouse or specific lenders. I loose a deal or so a month because of low inventory on the existing market and tons of building in my area.

    2. Todd M Gorman says:

      Wells Fargo is clearly in the crosshairs for this. They make sweetheart deals with the builders. And I’ve always contended that when a builder offers an incentive to use there lender only. It is clearly Steering. KB Homes did it to me this weekend and offered only $1000 to my buyer if they use Wells Fargo who was sitting in the model home. Wells is next! :-)

  3. FL-MTG-BRKR says:

    I agree with Josh, I recently lost a file to the “preferred lender” because the builder offered the buyer 12k in closing costs/incentives… Even if I premium priced the loan to the max limit, it wouldn’t have come close… How is THIS still going on??? Oh, right, $$$ in the pockets of the lobbyist and law makers… I spent four months working with that buyer, she couldn’t find an existing home she liked, so she built one.

    1. Fank says:

      This is one of the good things that has came out of the CFBP. These types of practices have never been allowed, but no one enforced the rules. Florida is known for this type of practice. Five years ago, builders were giving away TV’s, gift cards and I even heard cars, which is all “illegal”, but no one came after them. Now it is starting to happen.

      1. Paranoid says:

        Giving gifts to the borrower directly is not an illegal practice. It’s only when the builder and lender are exchanging something of value.

  4. Chad says:

    It’s a shame that it was one lender whistle-blowing on another. If I’m satisfied with anything here, it’s the fact that realtors have finally felt the burn. We lenders need to wake up, pull together our resources, and finally figure out consumer-direct lead generation rather than relying on realtor referrals for our livelihoods. If there was ever a time for this, that time is now.

  5. Wes says:

    Drain the Swamp…close the CFPB!!

  6. Tim McConnell says:

    I would like to understand how builders can steer customers to in house or preferred lenders with huge incentives. I loose at least a deal a month because pre-quals will end up buying new construction.

  7. Raymond Oshman says:

    When will CFPB go after builder mortgage companies and they way they operate to their advantage? They make it impossible for a consumer to shop with promises of pay for items already included in the price of the house as we all know.

  8. Penni Goodall says:

    Now maybe they will go after the builders who steer their buyers to their mortgage company!

  9. Liz Bayer says:

    How does ZILLOW’s co branding fit into the MSA conflict where there is a premier real estate agent who ‘invites’ a loan officer to ‘co-brand’, essentially paying for half of the realtor’s branding? Why would an LO want to do this if that realtor is not allowed to refer business?

  10. But EVERYONE was doing it... says:

    What seems to be lost on many real estate agents and mortgage brokers is that these activities have always been illegal. It has nothing to do with CFPB rule making. If the CFPB disappeared tomorrow it would still be illegal. RESPA is not the result of rule making by a rogue agency. It is a federal statute. And it can be prosecuted as a crime, or in this case as a civil penalty. The difference is that HUD had (effectively) about 100 investigators for the entire country to deal with RESPA issues. The CFPB took over RESPA enforcement and has has about 12,000 investigators (not all on this issue, of course), and a very effective snitch line.

    As Frank & Brian pointed out the biggest threat, other than state licensing authorities going after licenses, is the potential for class actions against agents and lenders.

  11. Joshua says:

    I logged in to state what Josh and FL-MTG-BRKR both stated! I had two deals-I did keep them-with clients who built. They had incentives near $4,000 towards closing costs if they used the preferred lender. We are priced super competitive so I was actually able to beat both deals without that help, but the buyer was still upset that they wouldn’t give them a credit simply because they used me. I brought it to the attention of our Secretary of State-Loan Broker Division who passed us along to the CFPB. It stopped there-but I am thinking about bringing it back up to pursue further.

  12. Dan Neumann says:

    I worked 2 years with a JV with Wells as an MSA. Our comp plan was half of friends of mine in the business. Don’t forget Title Co’s., pest control, in-house insurance, etc. Not just mortgage companies. Most of the Realtor’s profits come from MSA partners. There pay structure will drastically change for agents if/when MSA’s are no longer!

  13. Leslie says:

    Right! The Builders/Developers and “their” special bank lenders seem to get away with this sort of steering activity without issue!! JUST this week, one of my clients in San Diego said that even though I could match the rate and cost them slightly less, allllll of the other perks and benefits with the special builder’s bank made it so easy to go with them. I even suggested allowing us both to provide the closing paperwork numbers and so they could make a final decision at the very end of the process. The Builder was pushing them so hard, along with a strict deadline, they just had to go with the Builder’s bank. Further, I suggested to them that they get an Appraisal from a third party not involved with the builder, to make certain that the builder’s bank is not coming up with an Appraisal value to match the sales price desired by the builder, in case the actual value is less?! The transaction is supposed to close by February 17th, so, we will seeeee…

  14. Joshua says:

    On a new construction the realtor tried to not give me their license number as the said they were just getting a little referral fee from the builder. Turned out to be almost 12K after I called the builder for more info.The incentives to use their lender went from $2,000 to $4,000 to $6,000 during the transaction on new construction. They also had to prequal them first before they could use me.

  15. Nathan says:

    It appears that most LO’s are facing the same obstacles no matter which market they are in when it comes to builders and lender incentives — Frank & Brian can you advise us /direct us on how as a industry we can get the CFPB to fine these companies? If the big ones get fined — the “little” builders will follow suit.

    Leaving a regular complaint on the CFPB WEBSITE seems to not accomplish anything

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