Dive Brief:

• Wells Fargo will no longer staff the offices and model homes of builders with marketers in its effort to snag new business from buyers.

• The banking giant is ending arrangements with approximately 200 builders and real estate brokers in response to stepped-up regulatory scrutiny created by the Real Estate Settlement Procedures Act, or RESPA. RESPA aims to prevent mortgage lenders, builders, real estate brokers and others from taking kickbacks for referrals — a practice the government said can lead some involved in the homebuying process to steer consumers toward unsuitable loans or insurance contacts.

• Wells Fargo for many years has rented space in the offices of homebuilders to position itself as a convenient and obvious choice for buyers who needed to apply for mortgages.

Dive Insight:

RESPA has not outlawed that kind of builder/lender collaboration, but Wells Fargo seems to have interpreted it as having some bias against the practice.

The National Law Review on Monday noted that large homebuilders — many with in-house mortgage lending arms or similar arrangements with other banks — should give the Wells Fargo decision “careful consideration.”

However, the article suggested that the creation of a builder-owned, in-house mortgage division might be a better alternative, under RESPA, than an arrangement with an outside lender, in light of the Wells Fargo move.

Still, the author wrote: “We see little reason at this point for builders with financial services divisions or affiliates to have substantial concerns of that nature.”