CFPB Takes Action Against Mortgage Kickback Agreements

Bureau Orders Michigan Title Insurance Agency to Pay $200,000

WASHINGTON, D.C. – Today, the Consumer Financial Protection Bureau (CFPB) ordered Lighthouse Title, a Michigan title insurance agency, to pay $200,000 for illegal quid pro quo referral agreements.

“Today’s action sends a clear and simple message, that quid pro quo agreements for real estate referrals are illegal,” said CFPB Director Richard Cordray. “The Consumer Bureau will continue to take action to ensure that the mortgage market is a level playing field where everyone plays by the rules.”

The Bureau found that Lighthouse Title violated the Real Estate Settlement Procedures Act (RESPA), which prohibits, among other things, providing something of value to any person with an agreement or understanding that the person will refer real estate settlement services.

Lighthouse Title offers title insurance and other mortgage-related services to consumers. Lighthouse Title entered into marketing services agreements (MSAs) with various companies, including, for example, real estate brokers, with the understanding that the companies would refer mortgage closings and title insurance business to Lighthouse. The agreements made it appear as if the payments would be based on marketing services the companies were supposed to provide to Lighthouse. However, Lighthouse actually set the fees it would pay under the MSAs, in part, by considering the number of referrals it received or expected to receive from each company. The CFPB’s investigation found that the companies on average referred significantly more business to Lighthouse when they had MSAs than when they did not.

Under the terms of today’s consent order, Lighthouse Title will pay a civil money penalty of $200,000. The company also is required to terminate immediately any existing MSAs with companies in a position to refer business to Lighthouse, and is prohibited from entering into new MSAs with any such companies.

A copy of the Bureau’s consent order is available here: http://files.consumerfinance.gov/f/201409_cfpb_consent-order_lighthouse-title.pdf

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The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit consumerfinance.gov.