The Consumer Financial Protection Bureau recently issued a statement that could spell the end of so-called marketing service agreements (MSAs) among firms that facilitate closings for real estate transactions despite arguments that such arrangements are only for marketing and other similar services.

The Bureau said fees collected in these deals among parties that include title insurers, appraisal and inspection firms and loan originators are often kickbacks for referrals—which are illegal under the Real Estate Settlement Procedures Act. Over the past several years the CFPB has assessed penalties of $75 million against mortgage companies involved in kickback schemes.

The mortgage industry has been looking for ways to structure their marketing services agreements that would acceptable to the CFPB, but the recently-issued guidance didn’t provide much insight or direction, said Richard J. Andreano, a partner with Ballard Spahr.

“For people who were looking for guidance and comfort, this isn’t it,” he said.

The CFPB said in its guidance that compliance concerns had already spurred many companies to cancel their marketing services agreements. Others, whose businesses are not dependent upon such agrements may do the same due to the ambiguity of the guidance.

“People were already being more cautious. But if people were teetering, this would likely push them into a more cautious stance,” he said.

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