Two weeks ago, it was Wells Fargo. Will Bank of America be the next big lender to end a type of marketing arrangement with builders and real estate agents over increasing regulatory scrutiny of such deals?
A spokeswoman for the Charlotte-based bank tells me it has not ruled out making a similar move.
Kris Yamamoto said Bank of America is in the process of evaluating the Consumer Financial Protection Bureau’s stance on the issue. She did not indicate how long the bank’s analysis might take.
“We do have similar agreements, and we're currently assessing the CFPB's recent interpretations of the law,” she said.
Banks and others who make home loans have been retreating from marketing deals with builders and real estate brokers as the Consumer Financial Protection Bureau, a federal regulator, probes such agreements for evidence of illegal kickbacks.
Federal law bans kickbacks in exchange for referring consumers to specific title companies, attorneys, lenders and others who provide homebuying services.
Under the arrangements mortgage lenders are now abandoning, lenders had paid homebuilders or real estate brokers fees in exchange for marketing the lenders to homebuyers as a preferred lender.
In another type of deal the regulator has scrutinized, lenders lease office space from brokers and homebuilders – an arrangement that puts the lender’s mortgage staff in close proximity to homebuyers.
On July 30, Wells Fargo announced plans to scrap all of its mortgage marketing services and desk-rental agreements. Wells Fargo cited increasing regulatory uncertainty as a factor. That same day, California-based Prospect Mortgage, one of the biggest mortgage lenders in the U.S., said it was ending similar marketing agreements.
Such moves also come as the Consumer Financial Protection Bureau has taken action against lenders for real estate industry deals.
In one recent example, in January Wells Fargo and JPMorgan Chase & Co. agreed to pay a combined $35.7 million to settle the bureau’s claims that loan officers employed by the lenders had participated in an illegal referral scheme with a Maryland-based title company.