On January 31, 2017, the Consumer Financial Protection Bureau (“CFPB”) announced a Consent Order (“Order”) with Prospect Mortgage LLC and certain of its affiliates (“Lender”). The CFPB alleged in the Order widespread violations of Section 8(a) of the Real Estate Settlement Procedures Act (“RESPA”), stemming from a host of agreements and arrangements the Lender allegedly had entered into with settlement-side parties such as real estate brokers. In tandem with the Order, the CFPB announced Consent Orders with each of the real estate brokerage firms identified in the Order (collectively, the “Real Estate Orders” and with the Order, the “Orders”). The Real Estate Orders represent repeat versions of the wrongdoing alleged against the Lender, and provide additional factual background on the alleged unlawful acts in the Order.

The breadth of the subject matter of the Orders, which in one round of settlements covered many common marketing-related arrangements between mortgage lenders and other settlement-side parties such as real estate agents and brokers, is unprecedented. Of course, the Orders collide with marketing and customer acquisition strategies of mortgage lenders that appear to be on the rise in the increasingly competitive rising-rate environment. This alert summarizes significant points in the Order (as informed by the Real Estate Orders) and outlines possible takeaways for mortgage market participants.