MBA’s Advice on MSAs; Steer Clear

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The ink is barely dry on the first loan application taken under the new TRID rules and mortgage lenders have something new (or old) to worry about.

CFPB, in its continuing efforts to protect consumers against those unscrupulous lenders out there, has issued its “guidance” on Mortgage Services Agreements (MSAs). The guidance they issued basically says they don’t like these types of arrangements and if you’re smart, you’ll stay away from them.

MBA has added its detailed analysis of CFPB’s guidance (MBA) and have come to the same conclusion. These agreements have come under fire and close scrutiny by CFPB. A lender would be wise to steer clear.

If you have one, they advise you to immediately evaluate the program if you wish to avoid supervisory and/or enforcement actions. In other words, if you got one, get rid of it quickly.

Many lenders have already heeded this warning. They’ve decided the rewards are just not worth the risks. In the long run, this may not be a bad thing for lenders. Why should a lender have to pay a fee to a gate keeper (you know who they are) to gain access to potential customers? Who really benefits besides the gate keeper? Is it any real tangible benefit to the consumer?

Let’s get back to good old competition. Let the best lenders win based on price, products, and service, not from participation in closed shop environments disguised as MSAs.

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Are these MSAs worth fighting for? Is this a hill lenders are prepared to die on? Based on MBA’s guidance it doesn’t seem so.

About the Author

Michael Vitali

Michael L. Vitali – Independent Consultant to the Mortgage Industry Mike Vitali is an independent consultant to the mortgage industry on matters concerning compliance and mortgage lending. He most recently served as the Senior Vice President and Chief Compliance Officer for LoanLogics, monitoring regulatory developments and their practical implications for the mortgage lending industry. His duties included research, interpretation, and analysis of existing and proposed legislation related to the industry in support of recommendations for policy and/or procedure changes to maintain continued quality and compliance with all applicable laws, rules and regulations, investor requirements, and standard mortgage practices. In his more than 40 years in the mortgage industry, in senior level management, he has gained experience in all areas of mortgage lending, risk management, and compliance. Mike is a past President of the MBA of Greater Philadelphia, is a charter member and was the second Chairman of the MBA of Pennsylvania, and a past board member and Legislative Chair of both associations. He is a recipient of the 1998 Mortgage Banker of the Year Award from the MBA of Greater Philadelphia, and the 2003 Chairman's Award from the MBA of PA, and currently serves on several compliance related task forces for MBA.