CFPB Issues Guidance for Digital Mortgage Shopping Platforms

The CFPB reminded operators of Digital Mortgage Comparison-Shopping Platforms of referral fee prohibitions under Section 8 ("Prohibition against kickbacks and unearned fees") of the Real Estate Settlement Procedures Act ("RESPA").

In the Advisory Opinion, the CFPB said mortgage comparison platform operators often utilize consumer information to generate potential mortgage lending leads for service providers by either encouraging consumers to click-through to a service provider's individual website, or selling consumer information to service providers. The CFPB said that under RESPA Section 8, accepting payment in exchange for mortgage referrals is prohibited, although certain bona fide payments for services or goods provided would be permissible.

The CFPB also warned that a mortgage comparison platform operator would violate RESPA Section 8 if: (i) the platform non-neutrally uses or presents information about one or more settlement service providers participating on the platform; (ii) the non-neutral use or presentation of information results in consumers using the settlement services provider, or otherwise affirmatively influences the selection of such settlement services provider; and (iii) the operator receives a payment or other thing of value related to such referral activity. The CFPB also said receiving a higher fee for including a specific settlement service provider compared to other settlement service providers participating on the same platform would constitute a violation.

CFPB Director Rohit Chopra said the Advisory Opinion provides clearer guidance to operators of mortgage comparison-shopping platforms about how prohibitions under existing law apply in the digital era. He said that this action is part of a broader CFPB-led effort to "end the illegal biasing of ostensibly neutral platforms," and that the CFPB will continue to take steps to ensure the mortgage market remains resilient and competitive.