Are you a mortgage lender who wants to enter a marketing service agreement with a real estate brokerage company? Or you might be a real estate brokerage company who wants to get into marketing service settings with a mortgage banking company. In both events, the two companies know that they cannot pay other companies for business references because of the anti-kickback provisions listed in Section 8 Law of the Real Estate Settlement Procedure (“RESPA”). But mortgage lenders can pay real estate brokers for valuable services related to advertising lending services to consumers served in the community by mortgage banking companies.
We can all learn how to regulate marketing service agreements correctly so we avoid problems with regulators and avoid lawsuits. Let’s ask a few questions and give some answers to marketing service agreements (“MSA”).
1) Why do we make a marketing service agreement?
Answer: RESPA prevents mortgage lenders pay a real estate company for client references. But the law allows legitimate marketing services and maintains properly where lenders pay a real estate company to carry out certain advertising services specified for the interests of mortgage lenders.
2) What do I need to do to make sure I do it right?
Answer: Both parties need a predetermined marketing service program based on various policies, procedures, reviews, and confirmation that specific services offered are actually provided incompatiently and confirmed. You also want to identify and define specific advertising services that your company allowed in this setting. This is a lack of specified programs that often lead to companies that enter the marketing service agreement with risky requirements that may not be included by the parties.
3) Do I need to do economic analysis?
Answer: Yes, it is important that mortgage lenders pay firmly from a reasonable value of the services provided for each contracted service. Most mortgage banking companies will hire third parties to conduct this economic assessment. There are several leading companies that are good out there that do this service and it is important to cooperate with these companies to ensure that the appropriate economic evaluation is carried out for any advertising services to be approved by their parties.
4) Can I get into MSA with any kind of business?
Answer: This is an assessment call / usually you will want to enter MSA with a real estate brokerage company or maybe a home builder. Remember that our focus here is to identify the company that we want to spend dollar advertising to reach consumers who need mortgage financing for their home purchases.
5) How do I know I don’t pay too much for service?
Answer: Again, get an economic assessment carried out by a leading company that understands this business and asks them to appreciate each service that will be listed in your MSA. Always pay less than the valued amount for each service is on the safe side.
6) What services can I contract with real estate companies?
Answer: We have seen website ads, email explosions, signage in realty companies, and hourly consulting services as a few examples.
7) What control do I need to make sure my MSA process is obedient?
Answer: We recommend that you do a monthly review of your MSA and get evidence that all the contracted services are indeed done according to the agreement.