Countrywide Home Loans, GE Capital, Intuit and Microsoft are set to become charter members of a new trade organization, dubbed the Electronic Financial Services Council. The group will address a range of regulatory issues affecting online lenders, including restrictions on referrals in areas such as online advertising, licensing requirements that vary among states and the legality of electronically delivered disclosure documents. It also will tackle broader issues that affect online financial services, such as privacy law and the use of digital signatures. The act has an anti-kickback provision that prohibits payment for referrals.
Advertising is excluded, but electronic links placed on portal sites are a gray area.
Respa, for example, does not permit a lender to pay a portal site extra every time someone clicks through a banner ad and then fills out an application for a mortgage. But even before the advent of online lending, portions of Respa were considered unclear. King does think the council could be successful in having Respa amended, however. Other issues will need to be fought state by state. Different states have different licensing requirements, some mandating a physical office in order to do business.