In an important move for independent settlement service providers across the United States, Wells Fargo announced on July 25, 2013 that it was discontinuing its business relationship with at least eight (8) different controlled business arrangements as it seeks to downsize its role in the CBA marketplace.
An article in American Banker helps to explain the decision. Click here for that article.
Citing increased pressure from regulatory compliance measures that are being put in place by CFPB, Wells Fargo decided to exit those arrangements. While not a complete exit from the CBA market by Wells Fargo, this decision could be a bellwether for similar moves by large lenders who see the risk of these ethically and legally-challenged entities as greater than the benefit to their bottom lines.
Kudos to Wells Fargo for having the foresight to understand what many in NAILTA already know and advocate — CBAs are nothing more than a conduit for questionable, and in some cases, illegal referral payments at the expense of American consumers.
Also, a hearty thank you to all of the NAILTA members who have been working tirelessly to convince legislators, regulators and industry stakeholders like Wells Fargo that the CBA proposition was pure mythology. Our work continues, but it is reassuring to see the industry take notice and make change where change is needed.