Would it be an issue for lenders to share realtor posts showing listings on social media?

What sort of issue - like free advertising and a Section 8 violation?

In other words, you could have a RESPA Section 8 violation for kickbacks and unearned fees if one party is getting a "thing of value" (like advertising space).

From 1024.14(b):
"(b) No referral fees. No person shall give and no person shall accept any fee, kickback or other thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or part of a settlement service involving a federally related mortgage loan shall be referred to any person."

While there really isn't much specific guidance on joint advertisements between lenders and Realtors, HUD released some FAQs in July of 2016 that included the following question which explains that each party must evenly split costs (which is not an easy task):

18. Can a mortgage banker and a real estate broker advertise their services together, for example, on the same brochure or newspaper advertisement?
Nothing in RESPA prevents joint advertising. However, if one party is paying less than a pro-rata share for the brochure or advertisement, there could be a RESPA violation.

The point is that in any joint advertising arrangement, you need to make sure you each pay a pro-rata share for the advertisement which isn't always an easy task to do/prove. The challenge is that the pro-rata share could include costs for things like labor and design, which aren't always clearly defined. In addition, it is a good idea to have an attorney work up a marketing agreement that clearly outlines everything in attempts to mitigate any risks associated with Section 8.

I assume the same risks would there for tagging realtors or title companies as well?

The biggest problem the regulatory oversight inconsistencies where our loan officers see realtors and mortgage brokers sharing and tagging each other all the time so they don’t believe there are risks.

I'm not sure how a "share" or "tag" would NOT be considered a thing of value - so, yes, I would think the risks would be the same.


I completely agree with you, but at the end of the day, I wouldn't want to have to defend our position with an examiner on a potential RESPA Section 8 issue.

I know you are talking the very literal interpretation of the rule, but when you think about the intention of the rule how are these practices harming the consumer? Tagging, Liking, or sharing a realtor post is not going to increase the cost of a loan. If examiners are focusing on these issues, then they are doing the banking and regulatory agencies a disservice.

I agree but if it is a thing of value what would the explanation be of why you tag a realtor other than to encourage referrals?

I don't disagree with you Caroline Blue as regulated financial institutions absolutely have a competitive disadvantage when compared to (mostly) unregulated entities like mortgage brokers and loan shops. That said, I've had UDAAP discussions with examiners before and firmly take the approach to avoid them whenever possible.

I get it. Yes, it's a technical violation, but hopefully examiners are better allocating their time to important issues. How can tagging, liking, sharing a realtor post be UDAAP? Scenario I'm thinking of.. realtor posts an article about saving for your first home and bank likes it. I can't think of anything that is unfair, deceptive or abusive about this practice. Worst case I can think of is the realtor is a crook and the bank takes a reputation hit for "endorsing" him/her.

You might want to read this and then discuss with your EIC if you do this "joint" advertising via social media.

I'm not sure if sharing posts would cross over into the "marketing agreement" world or not but I wouldn't be willing to take the risk.

https://media2.mofo.com/documents/170302-respa-cfpb.pdf

The Lender was directed not to enter into the following arrangements (again without consideration of the Section 8(c)(2) exception) with real estate brokers or agents:
o Marketing services agreements (MSAs);
o Lead agreements;
o Co-marketing agreements; and
o Desk rental agreements that include any understanding that the real estate agent or broker would endorse the Lender or otherwise influence a home buyer’s selection of the Lender.

Where I think the UDAAP Adam referred to might come into play is the assumption made by the consumer the agent and lender are endorsing one another.

Considering any individual that violates Sec. 8 can receive a $10,000 fine and up to one year in jail...well I just don't see taking the risk regardless how minimal.

How can a Bank like anything or anyone? A bank is an inanimate object. And who makes these decisions - the board of directors?

Kind of ironic that I'm trying to defend this stuff since I don't use any social media.

I guess I should have used "like". I was referring to Facebook. The marketing department runs all the banks' posts by me but I have no idea if and what they are "liking" on other peoples pages. I appreciate the discussion.