Christopher Friedman Discusses CFPB's Warning to Digital Mortgage Shopping Platforms
February, 2023 - Birmingham, Alabama
Bradley attorney Christopher Friedman was quoted in National Mortgage News on the Consumer Financial Protection Bureau’s (CFPB) warning to digital mortgage shopping platforms. The CFPB’s stance suggests that these platforms could violate the Real Estate Settlement Procedures Act’s anti-kickback rules by providing prominent placement of a lender on their sites based on compensation rather than neutral decision criteria.
If anything, the CFPB’s actions “muddies the water in terms of the difference between what is an advertisement and what is a referral,” said Friedman. “The CFPB seems to take the position that simply presenting information to a consumer in a particular order is steering and because it's steering it constitutes a referral.”
While a referral is one of the key elements in creating a Section 8 violation, the other is receipt of a thing of value, such as a fee, creating a quid pro quo. It’s important for lenders to understand how the sites they work with operate because they do have some liability.
“They need to understand whether or not their advertisers are using algorithms or other digital methods for determining how they as the lender show up on the advertiser’s website,” Friedman explained. “So they need to do some diligence with their advertising partners.”
The full article, “CFPB warns mortgage shopping sites on RESPA violations,” was published in National Mortgage News on February 9, 2023. (login required)
