RESPA Section 8 enforcement: patterns and lessons

Two kinds of cases

Some Section 8 actions involve deliberate schemes — referral payments disguised as marketing fees. In January 2015, for example, the CFPB and the Maryland Attorney General took action against Wells Fargo and JPMorgan Chase over an illegal marketing-kickback scheme involving the title company Genuine Title.

Other problems start as legitimate co-marketing and drift into de facto referral arrangements. That drift tends to involve a combination of:

Payments that grew beyond FMV as the business relationship deepened
Services that became nominal while payments continued at the same or higher rates
No documentation that any FMV review ever occurred
A culture in which loan officers viewed co-marketing payments as relationship maintenance rather than regulated transactions

In drift cases, documentation is what separates an arrangement you can explain from one you can't. An arrangement may have been sound at inception, but without contemporaneous records there's little evidence to show it.

Marketing services agreements under scrutiny

Marketing services agreements (MSAs) — arrangements where lenders pay real estate brokerages or other settlement service providers for marketing services — were a major focus of CFPB enforcement in the mid-2010s. In Compliance Bulletin 2015-05, the CFPB warned that MSAs carry substantial legal and regulatory risk.

The landscape has since shifted. In PHH Corp. v. CFPB (D.C. Cir. 2018, en banc), the en banc court reinstated the panel's RESPA holding — a reading of Section 8(c)(2) that permits payments reasonably related to the market value of services actually performed. In October 2020 the CFPB rescinded Bulletin 2015-05 and published FAQs on Section 8 instead. MSAs remain permissible — and remain scrutinized.

Problems in past MSA cases have involved:

Payments that bore no relationship to the documented value of the services provided
Agreements that gave lenders preferred access to agents' clients — a referral benefit, not a marketing service
No contemporaneous FMV analysis; rates were set based on what the relationship seemed worth
Payments that continued even when services weren't being rendered or the agreed deliverables weren't being met

Desk rental enforcement history

Desk rental arrangements — where lenders rent office space inside a real estate brokerage — have generated significant enforcement attention. The violations generally followed one of two patterns:

Inflated rents: The rental rate significantly exceeded comparable commercial office space in the market. When the excess is unexplained, it suggests the lender is paying for access to the brokerage's agents and client pipeline, not for the workspace.

Illusory use: The desk wasn't actually used. Loan officers didn't work from the location. The rental was nominal — structured to appear compliant while functioning as a referral fee disguised as rent.

What good process catches

Documentation can't fix an arrangement that pays for referrals. But for arrangements that are genuinely for services, contemporaneous records and periodic review are what catch drift early and let you show what happened:

A written agreement executed before payments began establishes the intent and the terms
A contemporaneous FMV analysis with market comparables demonstrates the rate was legitimate at the time
Records of services delivered show the arrangement wasn't nominal or illusory
Periodic review catches drift — rising payments, declining services — before it compounds into a violation

Records don't make a payment lawful. They are how you show, months or years later, that a payment was for services actually performed at market value.

Key lessons for compliance programs

Practical guidance for compliance programs:

Document FMV before the first payment, not after the first examination request
Review and re-benchmark arrangements annually — rates that drift above market create exposure even in arrangements that started clean
Treat services delivery as a compliance requirement: maintain evidence of what was delivered, not just what was contracted
Sever arrangements where services aren't being rendered — don't simply reduce payments while continuing the relationship
Train loan officers: they are frequently the ones entering into these arrangements, and they often don't understand the RESPA implications