Citing “recent regulatory developments,” Bank of America (BAC) will become the latest lender to discontinue its use of marketing services agreements.
Bank of America Senior Vice President Terry Francisco confirmed to HousingWire that Bank of America will discontinue its marketing services agreements by Nov. 1
Francisco also said that Bank of America is going to terminate its space rental agreement programs in accordance with the terms of each agreement.
“While the decision to wind down our MSA and SRA programs was difficult, the end of these programs allows us to pursue different ways we might help builders and Realtors provide superior service and financing solutions for their customers,” Francisco said.
Bank of America is not the first lender to stop using MSAs, and it appears they won’t be the last one out the door either.In July, Wells Fargo (WFC) and Prospect Mortgage each announced decisions to discontinue MSAs.
Both pointed to recent interpretations of Real Estate Settlement Procedures Act requirements, with Prospect saying they introduce substantial uncertainty to the rules and requirements applicable to MSAs.
As banks are re-evaluating the roles (if any) with regard to MSAs, there is increasing concern about running afoul of the CFPB and other regulatory agencies. However, many financial institutions are also looking beyond regulatory concerns. In addition to real — and perceived — concerns about cross-marketing programs and referral fees from a regulatory perspective, banks are also sensitive to the reputational risks involved as well. Because of these issues, some FIs are looking to distance themselves from the potential stigma associated with MSA and SRA programs.
Overview by Ed O’Brien, Director, Banking Channels Advisory Service at Mercator Advisory Group
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