The Consumer Financial Protection Bureau (CFPB) has detailed its recent advisory opinion regarding consumer protections against digital mortgage comparison-shopping platform double dealing.
“Given the rise in mortgage interest rates, it is even more important for homebuyers to shop and compare loan offers,” CFPB Director Rohit Chopra said. “We are working to ensure that online platforms are not manipulating their search results in order to coerce kickbacks from lenders.”
The CFPB maintains financial arrangements that influence or manipulate search results are illegal. When shoppers use a lender that is not the best option for their needs, the result may be conducting business with a lower quality lender or paying thousands of dollars more in closing costs or interest.
According to the CFPB, companies violate the Real Estate Settlement Procedures Act (RESPA) when they steer shoppers to lenders using pay-to-play tactics rather than providing them with comprehensive and objective information.
The CFPB maintains under RESPA, it is illegal for companies and individuals that include digital comparison-shopping platforms to receive kickbacks and referral fees in connection with a transaction involving a residential mortgage or other real estate settlement service.
Eliminating illegal kickback schemes enables fair competition by forcing lenders and other providers to compete on a level playing field and leads to lower rates and higher quality service, according to the CFPB.
The CFPB indicated the advisory opinion seeks to aid companies in complying with existing law by offering greater clarity regarding how firms can navigate issues associated with digital mortgage comparison-shopping platforms.