The social media landscape is perpetually changing and sometimes the regulations can’t keep up. Whether this is a good or bad thing for lenders remains to be seen, as regulators across the nation have differing opinions.
As an example, take the lowly “like.” It is the workhorse of social media. Likes are what you build on to become retweeted (RTs) or shared on and across platforms. Likes attract new viewers to posts, and give credibility to the poster. Clearly, they have value.
But for regulators, are likes something they would consider a “thing of value” under the Real Estate Settlement Procedures Act (RESPA)? At first glance, it seems unlikely, but if you take a closer look, it is something to be wary of. Loan Officers can easily run afoul of the rules if they receive something of value in exchange for promotion of the services or products of others, and “likes” do have value. There are even companies who sell them to businesses struggling with their social media footprint.
For regulators, the dilemma is determining how much a like is worth. Dollar amounts have been thrown around, like $3 to $7 to $11 depending on the size of the social pool involved, but there is no definitive way to assign value to it. Yet, you should advise your Loan Officers to tread lightly. In many ways, social media posts are very similar to advertisements and things like TILA regulations surrounding disclosures most certainly apply to them. Why would RESPA violations differ?
If your Loan Officer likes and shares on their social media a real estate agent’s posting for a house they are selling, didn’t the real estate agent receive something of value? After all, if the agent has 10,000 followers and so does the Loan Officer in question, the real estate agent now has double the audience and exposure he or she would have if it hadn’t been shared. Presented in those terms, it’s easy to see how this could be seen as free advertising.
Create guidelines and conduct training on what is and isn’t acceptable in terms of social media with RESPA in mind. As necessary, include social media information as part of outlined co-marketing agreements. Social media service parameters should be spelled out in the agreement with a clear description of all shared costs. Many lenders tie the relatively free social media marketing into the fees associated with paper advertising costs.
Advise your Loan Officers to make every post—even cross-posts—their own. This is a great method for avoiding regulatory interference now, or in the future, and is also effective for generating leads. If the Loan Officer wants to share a post from a realtor or settlement agent, guide them toward adding information in the subject of the cross-post, like contacting them to get pre-qualified for a loan or generally discuss home financing options. Now, instead of a post that only benefits the real estate agent, it is a post that also benefits the Loan Officer and makes the social media exposure more effective.
Make sure to outline in your policy that your loan officers should not be reposting/liking the same realtors or settlement service providers account posts repeatedly in a way that shows clear favoritism or steering. This may bring more risk as a regulator could see this as an indication of a potentially non-compliant relationship or free advertising without a marketing service agreement (MSA) outlined with those partners or costs shared.
Monitor your Loan Officer’s activity on social media. Loan Officers are out there hunting for business and compliance teams should be regularly monitoring social media activity for noticeable patterns of cross-posting between Loan Officers and specific real estate or settlement agents. Ensure that LOs are following company social media guidelines and issue corrective action as necessary to demonstrate a comprehensive due diligence process to your regulators.
Because there are no clear regulations centered on likes or sharing on social media at this time, it may be tempting to give Loan Officers a little leeway, but we advise erring on the side of caution. Section 8 of RESPA prohibits anyone from giving or accepting a fee, kickback or anything of value in exchange for referrals of settlement service business involving a federally related mortgage loan. To pay for lunch, door prize or flyers, would be a thing of value, and more and more regulators are seeing the innate value in social media marketing.
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