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In the April column, we warned that the Consumer Financial Protection Bureau (CFPB) was going to be aggressive on RESPA, as it has more resources and power than HUD ever had. Two cases were worthy of CFPB press releases, but numerous others are waiting in the wings. Of the two major cases, one called into question the disclosure and marketing practices of affiliates, and the other, the payment arrangements in a title-affiliated business.

The takeaway from the first case is that firms must follow to the “capital N-O-T” the HUD 1996 sample affiliated business disclosure. They also must not use the disclosure to push in-house services or leave the impression that one might have to use the services in their other agreements. Not only must the firm change its materials and practices, but it will have to pay a $500,000 fine. Of course, that is a lot of money, but the CFPB has the power to fine up to $5,000 a day for mistakes, $25,000 a day for reckless violations and $1 million a day for intentional violations, so it could have been worse. For the record, a year’s worth of mistakes could cost $1.825 million, recklessness $9.125 million, and $365 million for flouting the law directly.

The second case is murkier but makes a violation of the practice of paying commissions to title agents who were not employees of the title insurer they were making referrals to. It would be OK if the agents were employees, according to the CFPB, but since they are not, the commissions are illegal referral fees. The fine in this case was $30,000.

What is noteworthy is that both cases were settled via consent decrees. What this means is that the defendant chose to concede rather than contest the prosecution through the administrative law process or the courts. It is perfectly reasonable for a firm to decide to cut their losses and agree to change their practices and pay a fine rather than spend millions litigating a point they might ultimately lose. The problem the industry has with consent decrees is that it changes the rules of the road for everyone based on essentially one case or fact-pattern without judicial scrutiny for the most part. So a firm would be putting itself at serious risk if it continued to use an affiliated business disclosure that did not conform to the consent decree mentioned above. Likewise, a firm that continued to pay commissions to non-employee title agents would also be risking prosecution.

This is just the beginning of enforcement actions. For example, all forms of marketing agreements will receive scrutiny, whether they are done by large firms or individual agents or teams. The less these agreements look like genuine marketing and the more they look like compensation for a referral arrangement, the more likely CFPB will prosecute.

Of course, anyone already violating RESPA by taking things of value from referrers or giving things of value for referrals is at greater risk. It is not just the CFPB one has to worry about. It is very easy for competitors to make these complaints and CFPB to act on them. So when one competitor sees another competitor’s real estate agent friend in their seats at the stadium, it is much easier to submit the RESPA complaint and much easier for CFPB to investigate and act. And that is what they intend to do. For tools and products to prevent RESPA violations, visit

This column is brought to you by the NAR Real Estate Services group.

Ken Trepeta is the director of Real Estate Services for the National Association of REALTORS®.

For more information, visit