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On February 7, the CFPB issued an Advisory Opinion to address the applicability of RESPA section 8 to operators of certain digital technology platforms that enable consumers to comparison shop for mortgages and other real estate settlement services, including platforms that generate potential leads for the platform participants through consumers’ interaction with the platform.

Generally, this Advisory Opinion describes how an operator violates RESPA section 8 if the platform provides enhanced placement or otherwise steers consumers to platform participants based on compensation the platform operator receives from those participants rather than based on neutral criteria.

More specifically, this Advisory Opinion states that an operator receives a prohibited referral fee in violation of RESPA section 8 when:

  1. The platform non-neutrally uses or presents information about one or more settlement service providers participating on the platform;
  2. That non-neutral use or presentation of information has the effect of steering the consumer to use, or otherwise affirmatively influences the selection of, those settlement service providers, thus constituting referral activity; and
  3. The operator receives a payment or other thing of value that is, at least in part, for that referral activity.

The Advisory Opinion went into effect on February 13, 2023.

Putting It Into Practice: This recent guidance should remind us that referrals can arise in the digital marketplace depending on the facts and circumstances. As a result, operators and other participants involved in digital comparison-shopping platforms for real estate settlement services should revisit RESPA and their related regulatory risk. This re-look should include a review of the information is being presented to consumers, how it is being presented, and the payments that flow from the lender to the platform operator. The issuance of this RESPA Advisory Opinion—while not creating new requirements—suggests that supervisory inquiries and enforcement actions are likely to follow as a consequence of this guidance.