In late 2016, Joe Welu, CEO and Founder of Total Expert, hosted a webinar with Mitch Kider, Chairman and Managing Partner of Weiner Brodsky Kider PC, to discuss Co-Marketing Best Practices. Kider made two statements that became very true in early 2017 when the Consumer Financial Protection Bureau (CFPB)assessed over $3.5M in penalties and consumer compensation, including:
- The CFPB will continue to enforce RESPA Section 8 in 2017.
- RESPA is a “two-way street,” meaning both parties in a co-marketing relationship are liable.
With uncertainty swirling due to changes in the political climate, many lenders have questioned the future of the CFPB and their ability to enforce penalties related to RESPA.
However, Kider talked about growing levels of enforcement by the CFPB at a federal level likely coming in 2017. For those who questioned whether the CFPB would enforce RESPA Section 8 in 2017, due to either limited regulatory guidance or the many ways to interpret the guidance with newer marketing tools like social media, the recent headlines suggest a very clear answer: the CFPB will continue to enforce RESPA Section 8.
RESPA: A Two-Way Street
Kider’s second statement referred to RESPA being a “two-way street,” meaning both parties in a co-marketing relationship are liable. The CFPB validated this with recent penalties assessed on both the Realtor and lender.
CFPB Director Richard Cordray said, “We will hold both sides of these improper arrangements accountable for breaking the law, which skews the real estate market to the disadvantage of consumers and honest businesses.”
This further emphasizes the importance of lawfully executing RESPA not only as a lender, but also ensuring any co-marketing partners are holding up their side of the relationship as well.
All aspects of these co-marketing partnerships must be tracked, reported on and stored in a central system of record, including:
- Calculations “to-the-pixel” of pro rata co-marketer share on all marketing assets.
- A breakdown of all payments made by each party on individual marketing assets.
By automating reporting and tracking of these aspects of deployed co-marketing, you can better prepare your organization for an audit, should the CFPB come knocking at the door.
Preparation Is Half the Battle
While headlines involving penalties may create concern about potential audits, it also helps highlight best practices for co-marketing in order to mitigate risk for your organization while remaining focused on revenue growth.
During the webinar, Kider talked in detail about how to prepare for an audit, highlighting the importance of consistent policies and procedures at an organizational level related to co-marketing activities like calculation of payments, evidence of fair market pricing, actual copies of marketing pieces, and other ways to be compliant.