CFPB cracks down on illegal mortgage kickback scheme

by Ryan Smith01 Oct 2014
A Michigan title insurance company has been ordered to pay $200,000 for allegedly participating in an illegal mortgage kickback scheme.

The Consumer Financial Protection Bureau on Tuesday announced an enforcement action against Lighthouse Title, which offers title insurance and other mortgage-related services. According to the CFPB, the company entered into marketing services agreements (MSAs) with various other companies on the understanding that the companies would refer mortgage closings and title business to Lighthouse.

While the agreements made it appear as though payments would be based on marketing services provided by the companies to Lighthouse, the CFPB alleged that Lighthouse actually set the fees it paid by considering the number of referrals it received from each company. The agreements violated the Real Estate Settlement Procedures Act (RESPA), according to the CFPB.

“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.”

Lighthouse will be required to pay a civil penalty of $200,000. It will also be required to immediately terminate any MSAs it has with companies in a position to refer business to Lighthouse, and be forbidden from entering into such MSAs in the future.


Is TILA-RESPA a good or bad thing long term?