The most dangerous statement in the English language is, “But we’ve always done it this way.” Referral business has always been a mainstay in our biz, and is not “against the law,” but oddly enough one topic that has come up a few times here in San Diego at the MBA’s conference is continued talk about MSAs, or Marketing Service Agreements. The CFPB spells out everything in its FAQ site. Attorney Brian Levy also discusses the topic in one of his Musings. One session yesterday included attorneys Mitch Kider and Troy Garris; any questions on the following should be addressed to them. The shorthand notes? Referrals are fine, but paying for them, think twice! RESPA’s been around for decades, the purpose being to discourage kickbacks and illegal referrals. You can’t give someone a thing of value for a referral. You can still do lots of things that you can do with your referral partners! Setting up an MSA? Make sure it is for real services, actual, and distinct, and have a reasonable price in the marketplace. The general public has to see the marketing. Don’t pay based on the amount of business you receive. Don’t ever write, “Hey, I’m going to stop paying you since I haven’t gotten any business from our relationship!” Regulators frown on warm handoffs, although they work when you’re handing it off to multiple parties on a rotational basis and a hand-off is fully disclosed to the consumer. (This week’s podcast is sponsored by Richey May, a recognized leader in providing specialized advisory, audit, tax, technology, and other services in the mortgage industry and in banking. Listen to an interview with Richey May’s Seth Sprague and Mignonne Davis on the current servicing landscape and trends as we enter 2023.)
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