CFPB Weighs in on Mortgage Shopping Platforms (with broader implications)
In February, the CFPB issued an Advisory Opinion regarding application of RESPA to “Digital Mortgage Comparison Shopping Platforms and Related Payments to Operators.” In refreshing HUD’s 1996 policy statement on computer loan origination systems, the CFPB warns (and reminds us) that platform operators violate RESPA’s referral fee prohibition when compensated operators non-neutrally present lenders to influence consumer choice.
While the Opinion is aimed at mortgage comparison shopping platforms, it is instructive as to the breadth of the CFPB’s interpretation of referral activity. The Opinion’s principles and examples should sound an alarm for other types of online marketplaces and lead generation businesses – and their customers – as it could fuel claims that exclusive lead sales violate RESPA. Furthermore, the Opinion drives home that UDAAP avoidance must always be top of mind and the inability of parties to avoid RESPA violations via disclosure.
Contact lsalzano@franzen-salzano.com if you have questions or concerns about your activities in light of this new Advisory Opinion.