Recently, the CFPB filed a complaint in the U.S. District Court for the Eastern District of Michigan against a real estate company, and an independent real estate brokerage firm and its brokerage affiliates and CEO, alleging violations of RESPA, Regulation X, and the CFPA. The CFPB claims that the real estate company (which operates a large referral network to match consumers interested in buying homes with real estate brokerages in the consumers’ local areas, and receives a portion of the brokerages’ commission for such referrals) violated RESPA and Regulation X by giving things of value to the network independent real estate brokerages—including referrals, the ability to continue receiving referrals, and priority for future referrals—under an express or implied agreement or understanding that the real estate brokers and agents would direct their clients to the real estate company’s mortgage and title and escrow services affiliates.

Among other things, the CFPB alleges that the real estate company enforced a “preserve and protect” policy, pressuring brokers and agents receiving referrals from the company to direct clients to the company’s mortgage affiliate instead of its competitors and to refrain from sharing information with the clients about products the mortgage affiliate did not offer. The complaint asserts that the real estate company’s mortgage affiliate charged higher rates and fees to clients who went through the company’s real estate brokerage network compared with clients who did not go through the network. The CFPB also alleges that the brokerage group and its CEO violated RESPA and Regulation X by accepting things of value and referring clients to the real estate company’s affiliated mortgage and title and escrow companies. Additionally, the complaint alleges that the brokerage group’s CEO engaged in a “dog bone” referral program under which agents were awarded gift cards for referring clients to the real estate company’s mortgage and title and escrow affiliates.

The CFPB’s complaint includes two counts: (i) the real estate company provided things of value to real estate brokers and agents in exchange for referrals to its mortgage and title affiliates in violation of RESPA Section 8(a); and (ii) the brokerage group and its CEO accepted and provided things of value for mortgage and title and escrow referrals in violation of RESPA Section 8(a). The CFPB seeks injunctive relief and restitution and other monetary relief, to address these alleged violations.