BofA reviewing real estate referral deals amid regulatory scrutiny

Two weeks ago, it was Wells Fargo. Will Bank of America be the next big lender to end a type of referral arrangement with builders and real estate agents over regulatory scrutiny of such deals?

A spokeswoman for the Charlotte-based bank tells me it has not ruled out making a similar move.

Kris Yamamoto said Bank of America is in the process of evaluating the Consumer Financial Protection Bureau’s stance on the issue. She did not indicate how long the bank’s analysis might take.

“We do have similar agreements, and we're currently assessing the CFPB's recent interpretations of the law,” she said.

Under such deals, lenders rent desks or office space at real estate firms in exchange for referring people in need of loans. The deals can also involve lenders purchasing advertising from the real estate industry.

On July 30, Wells Fargo announced plans to scrap mortgage marketing services and desk-rental agreements with real estate firms, builders and others. Wells Fargo cited increasing regulatory uncertainty as a factor.

The moves come as the Consumer Financial Protection Bureau, a regulator established by the 2010 Dodd-Frank Act, has been probing such deals to see if they violate federal law.

Federal law bans kickbacks paid in exchange for referring consumers to specific title companies, attorneys, lenders and others who provide homebuying services.

The probes have resulted in action against companies.

In January, Wells Fargo and JPMorgan Chase & Co. agreed to pay a combined $35.7 million to settle the bureau’s claims that loan officers employed by the lenders had participated in an illegal referral scheme with a Maryland-based title company.