Craig
Ungaro,
chief
operating
officer
at
New
Jersey-based


AnnieMac
Home
Mortgage,
which
originates
about
$3
billion
a
year,
said
his
firm
faces
similar
tensions.

“We
might
be
losing
partnerships.
There
are
some
times
when
we
have
to
make
decisions
that
aren’t
in
favor
of
the
relationships,
if
we
have
an
unwilling
partner.”

At
the
same
time,
Ungaro
cautioned
against
framing
the
issue
as
clear-cut
misconduct.

“This
isn’t
one
of
those
cases
where
there
are
bad
actors
that
everybody
knows
about
and
nobody’s
doing
anything
about
it,”
Ungaro
said.
“There’s
a
multitude
of
different
things
where
some
lenders
may
interpret
it
to
be
acceptable
and
some
may
not.
Those
two
worlds
might
feel
that
one
is
doing
something
too
conservatively
and
the
other
is
doing
something
wrong.” 

On
the
real
estate
side
of
the
business,
Linda
O’Koniewski,
the
broker-owner
of
Massachusetts-based

Leading
Edge
Real
Estate,
has
ended
some
partnerships
recently.
She
previously
operated
a
profitable

joint
venture
alongside
her
real
estate
brokerage
but
ultimately
decided
to
shut
it
down,
deciding
that
the
potential
legal
risk
was
not
worth
the
added
revenue. 

“My
attorney
once
told
me:
‘This
is
not
your
business.
You’re
not
in
the
lending
business
or
the

insurance
business.
You
guys
are
really
good
at
real
estate.
Stay
in
your
lane.’
Since
then,
it’s
almost
like
I’ve
done
the
reverse
of
everyone,”
she
said.

For
Sher,
Ungaro
and
O’Koniewski,
the
common
thread
is
uncertainty
—
a
market
where
interpretations
vary,
and
the
line
between
partnership
and
referral
compensation
is
not
always
clear. 

In
most
industries,
paying
a
fee
or
providing
a
gift
to
someone
who
brings
in
business
is
commonplace.
In
the
mortgage
and
real
estate
sectors,
however,
the
practice
is
largely
prohibited
under
the
Real
Estate
Settlement
Procedures
Act
(RESPA). 

Section
8
of
the
law
bars
the
giving
or
accepting
of
any
fee,
kickback
or
“thing
of
value”
in
exchange
for
the
referral
of
settlement
service
business
involving
a
federally
related
mortgage.
It
also
prohibits
splitting
or
sharing
charges
except
for
services
actually
performed.

Payments
are
generally
permissible
only
when
they
reflect
bona
fide
compensation
for
goods
or
services
provided
at
fair
market
value,
including
certain
marketing
services
agreements
structured
to
comply
with
the
law.

But
industry
leaders
and
attorneys
say
the
statute
—
enacted
in
1974
—
has
not
kept
pace
with
today’s

vertically
integrated
real
estate
and
mortgage
landscape,
creating
what
they
describe
as
an
uneven
playing
field.
They
argue
that
ambiguities
in
the
rules,
combined
with
recent
aggressive
legal
scrutiny,
are
fueling
renewed
calls
to
modernize
RESPA.

“RESPA
is
specifically
designed
to
encourage
referrals,
but
referrals
made
in
good
faith
rather
than
‘pay-to-play.’
But
the
use
of
the
phrase
‘thing
of
value’
makes
interpretation
difficult
and
nobody
quite
knows
where
the
edges
are,”
said
Troy
Garris,
co-managing
partner
at Garris
Horn
LLP.

“Because
of
the
time
it
was
written,
the
technology
at
the
time
and
the
regulations
promulgated
underneath
it,
RESPA
is
outdated.
In
many
ways,
depending
on
how
it’s
interpreted,
it
could
prevent
some
technology,”
he
added.

Making
the
case
for
modernization

In
a
2024
white
paper,
the


Mortgage
Bankers
Association
(MBA)
argued
that
“as
consumers
in
the
housing
marketplace
become
more
empowered
through
online
shopping
and
better
price
discovery
and
information
delivered,
RESPA
stands
as
a
relic
to
a
past
era
of
real
estate-influenced
consumer
relationships.” 

The
trade
group
urged
regulators
to
modernize
the
statute
by
focusing
on
fair
market
value
standards
for
desk
rentals
instead
of
imposing
broad
restrictions,
and
by
replacing
strict
compensation
caps
on
marketing
services
agreements
(MSAs)
with
clearer
consumer
disclosures
that
preserve
borrower
choice.

The
MBA
also
called
on
the


Consumer
Financial
Protection
Bureau
(CFPB)
to
repeal
its
2023
advisory
opinion
on
digital
mortgage
comparison
platforms;
to
amend
Regulation
X
to
allow
direct
advertising
to
settlement
service
providers
as
long
as
no
referral
payments
are
involved;
and
to
update
guidance
on
affiliated
business
arrangements
to
reflect
today’s
remote
and
digitally
integrated
business
environment.

Nicole
Booth
is
the
director
of
public
policy
at


Zillow,
which
is
the

target
of
a
RESPA
lawsuit.
While
the
company
has
declined
to
comment
on
ongoing
litigation,
Booth
said
one
of
the
biggest
friction
points
is
how
Section
8
treats
referrals
in
a
digital
marketplace.

“Today,
consumers
shop
on
platforms
like
Zillow
and
other
sites
where
they
compare
multiple
options
and
interact
with
ecosystems
that
blend
advertising,
referrals
and
affiliated
services
all
in
one
place,”
Booth
said.
“The
law
doesn’t
always
clearly
distinguish
between
those
functions
in
a
digital
environment,
which
can
create
uncertainty
for
companies
and
confusion
for
consumers.” 

Booth
also
pointed
to

disclosure
requirements
as
an
area
in
need
of
reform,
since
they
were
designed
for
paper-based
affiliated
business
forms.

“In
a
digital
process,
repeating
disclosures
or
forcing
them
at
rigid
moments
can
feel
duplicative
rather
than
helpful,”
Booth
said.
“The
goal
isn’t
to
weaken
consumer
protections
but
to
ensure
transparency
is
meaningful
—
delivered
in
a
way
that
truly
helps
consumers
understand
their
choices
instead
of
overwhelming
them.”

‘Copycat’
litigation
emerges

Attorneys
say
that
although
RESPA’s
language
and
evolving
interpretations
have
created
compliance
risks
and
added
costs
for
lenders
and
brokers,
federal
enforcement
has
not
ranked
among
regulators’
top
priorities
in
recent
years.

That
shift
became
more
apparent
amid
a
reduced
enforcement
posture
at
the
CFPB.
One
example:
In

February
2025,
the
CFPB
voluntarily
dismissed
with
prejudice
a
“kickback”
lawsuit
it
had
filed
just
two
months
earlier
against
the

Jason
Mitchell
Group,

Rocket
Homes
and
others. The
dismissal
came
not
long
after
President
Donald
Trump
took
office
and
the
more
aggressive

regulatory
approach
by
the
Biden
administration
ended.

In
the
bureau’s
absence,
private
law
firms
have
stepped
in.
One
of
the
most
active
has
been

Hagens
Berman,
a
consumer
protection
firm
involved
in
similar
litigation
against

Zillow,


Rocket
Companies,


Veterans
United
Home
Loans
and
the


National
Association
of
Realtors. 

Rocket,
Veterans
United
and
Hagens
Berman
did
not
respond
to
requests
for
comment.

“We
have
seen
this
happen
before
—
a
lot
of
it
is
what
we’d
call
copycat
lawsuits,”
said
Richard
Andreano,
practice
leader
of

Ballard
Spahr’s
mortgage
banking
group.
“A
government
agency
may
bring
a
RESPA
claim
against
someone
that
gets
dismissed,
but
if
you
wait
long
enough,
a
private
lawsuit
will
be
filed
against
that
same
company
with
nearly
identical
allegations.”

While
such
cases
face

challenges
—
including
whether
they
can
be
certified
as
class
actions
—
their
mere
existence
exerts
pressure
on
real
estate
brokers,
mortgage
lenders
and
title
companies
to
remain
cautious,
attorneys
said.

“The
lawsuits
certainly
cause
parties
to
seek
to
comply
not
just
with
RESPA
as
it
is
written,
but
with
best
practices
that
regulators
have
developed
over
the
years,”
said
Loretta
Salzano,
a
founding
partner
at

Franzen
and
Salzano

PC.

“In
the
past,
these
lawsuits
have
also
changed
how
parties
draft
their
governing
documents
for
affiliated
business
agreements
and
they
know
they
cannot
be
monkeying
with
share
percentages
based
on
referrals.” 

Worst-case
scenario
would
be
‘devastating’

If
the
pending
cases
move
forward
and
result
in
judicial
rulings
rather
than
settlements,
they
could
help
clarify
lingering
gray
areas
in
RESPA
and
shape
how
courts
interpret
the
statute.

In
the
lawsuit
involving
Rocket,
for
example,
the
plaintiffs
allege
the
company
steered
homebuyers
to
its
mortgage
products
while
directing
leads
to
real
estate
agents.
In
turn,
the
agents
allegedly
encouraged
clients
to
use
Rocket
for
financing.
In
2025,
Rocket acquired real
estate
brokerage Redfin for
$1.75
billion
—
a
move
the
lawsuit
characterizes
as
a
“maneuver”
to
bring
the
alleged
steering
practices
in
house.

“This
suit
views
a
referral
for
a
referral
as
a
RESPA
violation,”
Andreano
said.
“When
HUD
had
RESPA,
they
would
say
that
a
referral
for
a
referral
violates
RESPA,
but
that
never
made
sense
to
me
because
mortgage
and
real
estate
professionals
always
refer
to
each
other.
That
is
just
the
natural
course
of
business,
there
is
no
money
changing
hands
and
it
doesn’t
increase
the
cost
of
the
settlement
transaction,
which
is
the
congressionally
stated
purpose
of
Section
8
of
RESPA.”

If
a
court
were
to
rule
that
a
referral
for
a
referral,
by
itself,
violates
RESPA,
Andreano
said
the
impact
would
be
“devastating”
for
the
industry.
In
that
scenario,
he
believes
industry
groups
would
likely
seek
legislative
clarification
from

Capitol
Hill.

“Imagine
if
you
have
a
consumer
sitting
across
from
you
asking
you
for
recommendations
for
a
lender
or
a
real
estate
agent
because
you
are
a
trusted,
knowledgeable
source,
but
you
can’t
give
them
that
information,”
Andreano
said.
“How
crazy
would
that
be?
I
don’t
think
this
is
what
Congress
was
trying
to
prevent
with
RESPA.” 

Others
warn
that
without
consistent
federal
enforcement,
interpretations
could
vary
across
courts.

“Without
the
CFPB
in
place
to
really
keep
things
uniform,
we
could
have
lots
of
different
opinions,”
said
Colgate
Selden,
a
founding
member
of
the
CFPB
and
a
shareholder
at

Baker,
Donelson,
Bearman,
Caldwell
&
Berkowitz
PC.

“The
industry
would
love
some
changes
on
RESPA,
but
the
CFPB
also
has
a
significant
list
of
regulations
to
work
on
with
a

smaller
staff.” 

An
MBA
spokesperson
said
there
are
no
updates
to
RESPA
modernization
calls
at
this
time
but
added
that
the
trade
group
is
engaged
with
the

Trump
administration
and
the
CFPB
if
and
when
that
changes. 

In
the
real
world…

While
calls
for
RESPA
modernization
continue
to
gain
momentum,
mortgage
and
real
estate
professionals
say
they
are
focused
on
establishing
practical
standards
that
allow
them
to
operate
confidently
and
serve
clients
effectively.

Todd
Armstrong,
a
San
Diego-based


Compass
agent
and
the
head
of
the
company’s
military
division,
said
that
as
an
agent
who
primarily
works
with

veterans
purchasing
homes
using
their

U.S.
Department
of
Veterans
Affairs
loan
benefit,
having
reliable
lenders
with
a
deep
understanding
of
the
VA
loan
product
is
imperative. 

“My
No.
1
VA
lender
and
all
the
others
I
work
with,
I
recommend
them
because
they
can
execute,”
Armstrong
said.
“They
understand
the
calculations
of
residual
income
requirements,
tidewater
notification
and
all
these
things
that
a
lot
of
lenders
don’t
have
a
clue
about.
For
me,
it
is
all
about
execution.” 

Armstrong
said
he
always
makes
sure
to
provide
clients
with
at
least
three
recommendations
per
service
they
ask
about
—
whether
that
is
lending,

title
insurance
or
homeowners
insurance.
And
while
he
understands
why
RESPA
exists,
he
does
not
want
his
clients
to
be
harmed
if
the
statute
is
found
to
prevent
him
from
providing
referrals. 

“Transparency
in
the
industry
is
essential,
but
an
ethical
relationship
built
on
client
success
is
what
is
most
important
to
me
—
and
that
shouldn’t
be
confused
with
a
RESPA
violation,”
he
said.
“Reliable
lenders
protect
both
the
transaction
and
the
client.” 

Holly
Spencer
Bunting,
a
RESPA
expert
and
partner
at

Mayer
Brown,
said
she
sees
similar
dynamics
driving
partnerships
across
the
industry.

“I
don’t
think
most
agents
can
be
persuaded
by
a
random
loan
officer,
who
doesn’t
provide
great
customer
service
and
isn’t
going
to
help
them
close
the
transaction,
offering
them
an
incentive,”
Spencer
Bunting
said.
“The
true
motivation
is
who
can
be
a
good
partner,
and
make
sure
that
the
customer
is
getting
good
service
and
ultimately
close
the
transaction.”