Digital mortgage comparison-shopping platforms violate the law by “double dealing,” the Consumer Financial Protection Bureau said in a recent advisory.
According to the Feb. 7 report, companies violate the Real Estate Settlement Procedures Act by steering shoppers to lenders with “pay to play” tactics rather than providing objective information; or through biasing an internal platform to benefit preferred providers, including companies in which the platform has an undisclosed financial stake.
Under RESPA, companies cannot receive kickbacks and referral fees for transactions involving a residential mortgage or other real estate settlement service. “Companies operating these digital platforms appear to be shoppers as if they provide objective lender comparisons, but may illegally refer people to only those lenders paying referral fees,” the CFPB said. “When shoppers use a lender that is not the best option for their needs, they may end up with a lower quality lender or paying thousands more in closing costs or interest.”
The report was released as the 30-year fixed mortgage rate was at 6.98 percent, more than doubling the 3.2 percent rate at the start of 2022. “Given the rise in mortgage interest rates, it is even more important for homebuyers to shop and compare loan offers,” said CFPB Director Rohit Chopra. “We are working to ensure that online platforms are not manipulating their search results in order to coerce kickbacks from lenders.”