Mortgage lenders are going to have to work harder on getting referrals from real estate agents the old-fashioned way: earn them.

Lenders have long relied on formal contracts with agents, known as marketing services agreements, to get referral business. These agreements spell out how the parties will advertise together or provide other services to consumers.

But in 2015, the Consumer Financial Protection Bureau, while not outlawing the practice, put the industry on notice that it considers certain forms of MSAs to violate of the Real Estate Settlement Procedures Act ban on payments for a referral.

In response, several major lenders, including Wells Fargo, PHH Mortgage and Prospect Mortgage, announced they would terminate their MSAs. With these arrangements on their way out, traditional word-of-mouth referrals become more critical for driving new business.

Some are suggesting that an end to MSAs will help ensure that the best loan officers and mortgage companies get referral business. Essentially, rather than relying on an MSA, loan officers will have to prove that they can provide the best mortgage experience for relators and consumers.

"Referrals are earned by doing actions beyond the sale," says Hunt Gersin, president and chief executive of Your Neighborhood Sales Consultants, a consulting firm focused on the mortgage business. "Give, don't expect to get anything. Follow the philosophy of 'give to give,' not 'give to get.'"

It's a tough time for such a shift, since mortgage originators are also adapting to other regulatory changes, including the CFPB's new disclosure form.

"You may have been driving for 30 years, but all of sudden every car switched and now the gas pedal is the brake and the brake is now the gas pedal," says Jeffrey Jaye, a mortgage broker in San Ramon, Calif. "It's like your whole life has changed in the way you've done something."

Jaye says his first two closings using the new disclosure form went so badly that he doesn't expect the clients (both first-time homebuyers) or the real estate brokers to refer other business to him. The complications stemmed from the new process, but the brokers had an easy scapegoat and blamed him for the closing delays.

Jaye says lenders will get better at the new process. But he is working to save the relationships he has rather than pursuing new ones right now. "I'm in survival/retention mode," he says.

Mortgage sales trainer Karen Deis, a former mortgage company owner and originator, compares referrals to restaurant reviews. "You either rave about the restaurant, it's OK or it stinks. I look at it as, you, as the loan officer, are the restaurant. If you provide good service, good information and continue to market on a regular basis" you will get a good review and earn more business, she says.

Deis created the Mortgage Girlfriends networking group for loan officers in 2007. Some of its members arrange regular, invitation-only Realtor Roundtables. The loan officer rarely speaks at these events, and instead brings in experts to offer insight on topics of interest. The speakers might be from real estate-related businesses or even people like self-defense instructors or chiropractors (agents spend a lot of time in their cars, Deis notes).

Mortgages are seldom discussed. "After almost every session, these gals swear they get between three to five referrals from the real estate agents afterwards," Deis says. "They're sitting around talking. They've now made friends with them."

Mortgage Girlfriends members also coach real estate agents on writing a business plan and do annual property valuation reviews for consumers — which are cobranded with agents.

Even when a real estate agent goes out of business (which happens to about a third of them every year, according to the National Association of Realtors), those annual reviews can pay off for lenders, Deis says.

"This gives you the opportunity to do the comparative market analysis every year and then introduce a new agent by saying, 'The agent you did business with is no longer in business. I would like to introduce you to Bob Smith, who will now be doing your comparative market analysis. If you know of anybody who is buying or selling a home, please call Bob Smith and here's his information,'" she says.

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