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Ben Olson Quoted in American Banker Article, "New CFPB Mortgage Reg Lets Borrowers Sue Lenders Over Vendor Lists"

Benjamin K. Olson

Ben Olson was quoted in Brad Finkelstein's American Banker article, "New CFPB Mortgage Reg Lets Borrowers Sue Lenders Over Vendor Lists," on September 25, 2015. 

Lenders that allow borrowers to shop for third-party settlement services will face new liability under the Consumer Financial Protection Bureau's integrated mortgage disclosure rules.

That's because the regulations that combine the Truth in Lending Act and Real Estate Settlement Procedures Act mortgage disclosures will put the requirement for lenders to provide borrowers with a written list of third-party service providers under the auspices of TILA, opening the door for borrowers to sue lenders for alleged violations.

"It is a requirement of Regulation Z, so there is the possibility of a private right of action for either failing to provide the list, or failing to provide the list consistent with the requirements. That is the most significant difference," said Benjamin Olson, a partner at the Washington law firm Buckley Sandler and a former deputy assistant director in the CFPB's office of regulations.

There remains no prescribed format for the written list of providers, Olson said, but added the CFPB has published both an example form and a blank template to show lenders what it expects.

Even after the change, any payment or other thing of value that changes hands to create a referral relationship remains a violation of the anti-kickback section of Respa. But that doesn't guarantee industrywide compliance.

"I don't see how the list would eliminate the incentive folks have to try and get these referrals. You want to be the one on the list," Olson said. "The question is do you get yourself on the list by providing outstanding service or are folks going to be tempted to get themselves on the list by entering into some sort of side agreement, where you're providing other services."

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