The FDIC recently announced a settlement with HomeStreet Bank in Seattle, WA where the bank was ordered to pay a civil money penalty of $1.35 million. Ouch! According to the FDIC, HomeStreet Bank was entering in to co-marketing agreements with real estate brokers. They were also renting space in the offices of real estate brokers and home builders. It is important to note and the press release did state:
While co-marketing arrangements and desk rental agreements are permissible where the fees paid bear a reasonable relationship to the fair market value of marketing or rental costs, such arrangements and agreements violate RESPA when the amounts paid exceed fair market value and the excess is for referrals of mortgage business.
As this enforcement action shows, the penalties for violating RESPA Section 8 can be quite a blow to your bottom line and is a reminder to pay close attention to any Marketing Service Agreements you may have at your institution.
If you are looking for resources to help in this area, we have your back! Our “RESPA Section 8” webinar covers the “substance over form” approach the CFPB has used when evaluating Marketing Service Agreements as well as best practices that could help you keep out of hot water. It is available now On Demand.