A title insurance agency has agreed to pay $200,000 to settle allegations that it violated the Real Estate Settlement Procedures Act (RESPA) by entering into marketing services agreements with companies, including real estate brokers, with the understanding that those companies would refer mortgage closings and title insurance business.

The Consumer Financial Protection Bureau alleged that beginning in 2009, Holland, Michigan-based Lighthouse Title entered into a series of marketing services agreements with real estate brokers and other companies, believing that if it did not, the companies would refer their clients to other title companies.

The agreements “made it appear as if the payments would be based on marketing services the companies were supposed to provide” to Lighthouse Title, the bureau said in announcing the settlement. “However, Lighthouse actually set the fees it would pay under the [marketing services agreements], in part, by considering the number of referrals it received or expected to receive from each company.”

The bureau said that its investigation found that the companies referred “significantly more business” to Lighthouse when they had marketing services agreements than when they did not.

Under the terms of a consent order, Lighthouse Title neither admitted nor denied the bureau’s findings, but agreed to pay a civil money penalty of $200,000 and to terminate existing marketing services agreements with companies in a position to refer business to Lighthouse. The consent order also prohibits Lighthouse Title from entering into new marketing services agreements for five years.

RESPA, which governs the provision of settlement services like title insurance, prohibits companies from paying kickbacks to agents and brokers for referring business to them.

In May, Alabama’s biggest real estate brokerage, RealtySouth, agreed to pay a $500,000 civil penalty to settle allegations that it “strongly encouraged” and in some cases required agents to use its affiliated title insurance and closing services provider. RealtySouth neither admitted nor denied allegations, including claims that the brokerage failed to provide adequate disclosures to consumers that they had a right to shop for settlement services.

The Consumer Financial Protection Bureau took over enforcement of RESPA from the Department of Housing and Urban Development (HUD) in 2011. Last year, Inman News columnist Ken Harney warned, “There’s a new RESPA sheriff in town. He’s looking hard for alleged lawbreakers and he seems to be in no mood for compromise.”

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