The Consumer Financial Protection Bureau warned on Tuesday that operators of mortgage comparison-shopping platforms may be violating RESPA if they manipulate search results to coerce kickbacks.

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Last year’s rapid runup in mortgage rates makes it more important than ever for homebuyers to shop around, but some comparison sites that claim to help you do the legwork may be breaking the law by steering borrowers to lenders that pay them for traffic.

That’s the gist of a warning shot federal regulators fired over the bow of mortgage comparison-shopping platforms Tuesday, in the form of guidance intended to protect consumers from “pay-to-play” tactics.

In an advisory opinion, the Consumer Financial Protection Bureau spelled out how operators of mortgage comparison-shopping platforms can run afoul of the Real Estate Settlement Procedures Act (RESPA), which targets unearned kickbacks and referral fees that can increase the cost of obtaining and closing a home loan.

In a nutshell, the bureau said comparison shopping sites are violating RESPA if they provide “enhanced placement or otherwise steer consumers” to lenders based on compensation paid by lenders to the site, rather than basing their rankings on neutral criteria like the interest rates and fees charged by the lender.

Rohit Chopra

“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 in a statement announcing the new guidance. “We are working to ensure that online platforms are not manipulating their search results in order to coerce kickbacks from lenders.”

In a more detailed dive into the topic, Chopra noted that comparison-shopping platforms “have exploded into multiple markets including insurance, travel, and banking.”

“When designed and operated legally, these platforms provide a valuable service and help consumers make sound financial decisions,” Chopra said. “But in practice, the game is sometimes rigged when companies that operate comparison-shopping platforms coerce payments to skew the offers presented to consumers instead of acting as fair referees.”

Chopra said consumers who are deceived by such practices “may face higher prices, be set up to pay thousands of additional dollars in interest, and unwittingly participate in a market that is anti-competitive” and which also harms honest mortgage lenders, brokers and loan officers.

“Honest mortgage professionals shouldn’t feel that middlemen get to extort fees for them to be able to compete and have their mortgage offerings seen by consumers,” Chopra said.

Chopra cited a 2020 settlement between the Federal Trade Commission and comparison site to resolve to allegations that the website’s operators claimed to provide unbiased information about student loans, personal loans, and credit cards, but in fact favored companies that paid for placement.

“If similar conduct is observed in the mortgage market, the CFPB will not hesitate to act,” Chopra warned.

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