MSAs Marketing Services Agreements: Co-Marketing and RESPA

1. MSAs:
Marketing Services Agreements
Co-Marketing

2. MSAs: Marketing Services
Agreements
C-10132
CE Forward, Inc.
S-1655
Jillayne Schlicke
I-0651

3. Welcome!
 Please complete your sign-in sheet
 Cell phones and laptops off while class is in
session.
 I-pads okay
 Breaks
 Bathrooms
 Coffee
 Water

4. Agenda
MSAs: Marketing
Services
Agreements
~
Co-Marketing
C-10132
Introductions
Boundaries
RESPA Section 8
Dodd Frank-QMs
Switch from AfBAs to MSAs
and Co-Marketing
Federal and State Law
Lighthouse Title
Preferred lender
Zillow
Lead Generation
Case Studies
Quiz
Evaluations
Certificates
Close

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

6. Boundaries
MSAs/RESPA
Policy
Time
Law

7. Section 1: MSAs:
 Preferred Vendor
 In-House Lender
 Preferred Lender
 Joint Venture
 Co-advertising
 Co-marketing

8. 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?

9. What do you want to learn today?
*

10. 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.

11.  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.

12. 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”

13. 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.

14. 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 Brokers
Disciplinary 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

15. 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?

16. 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.

17. 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.

18. Section 4: Best Practices
Analyzing an in-house or “preferred” lender
co-marketing agreement:
Something of value
Referrals
An agreement (quid pro quo)

19. 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?

20. 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?

21. Section 5: Best Practices
Zillow Co-Marketing
Something of value
Referrals
An agreement (quid pro quo)

22. Section 5: Facebook Ads
Home Scouting
Boomtown
What do you think about the ad content and
the interplay between the Realtor and the
consumer?

23. 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

24. 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!

25. 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.

26. 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