I am thinking about signing a marketing agreement with a real estate office. I am concerned with the CFPB and the legal ramifications. However, if I don't sign the agreement, I have several competitors who are waiting to jump on the opportunity. What should I do?
--Judy from Pennsylvania
I understand the competitive dilemma you are facing. I hear this time and time again from those who run branches and companies. First, I must say that I am not an attorney and thus I can't give you any legal advice. I can say that I share your concern, because from the news I read, the CFPB is focusing on these arrangements and several companies have been in the news regarding actions taken by the CFPB in this area. This makes it absolutely imperative that you get good legal advice from a qualified residential lending attorney. I would not take one step forward without that advice.
If you do move ahead, you need to make sure that any payments you make are justified in terms of the value you receive so that the payments can't be construed as kickbacks. From the value of signage and a desk space, to other benefits such as territory on a website, each item should be valued carefully. If you pay $4,000 monthly and only get $1,000 in value, you are going to be vulnerable. This is logic, not legal advice. Thus, in general, tread carefully and get good advice, making sure you cover yourself with regard to the payments are making and the value you receive.
Dave Hershman has been the leading author and a top speaker for the industry for decades with six books authored and hundreds of articles published. His website is www.originationpro.com. If you have a reaction to this commentary or another question you would like answered in this column? Email Dave directly at email@example.com.