The Colorado Division of Insurance has adopted a ban on marketing services agreements (MSA) for title industry members, effective Aug. 15.
The move, one of a host of new changes adopted in Reg. 8-1-3, is believed to make Colorado the first state to institute a ban on MSAs for the industry.
The adoption comes less than a year after the Consumer Financial Protection Bureau (CFPB) issued a bulletin stating it had “grave concerns” over the use of MSAs.
The CFPB bulletin explained that although MSAs usually are framed as payments for advertising or promotional services, in some cases the payments actually are disguised compensation for referrals. “Any agreement that entails exchanging a thing of value for referrals of settlement service business likely violates federal law, regardless of whether a marketing services agreement is part of the transaction,” the release added.
The CFPB bulletin included some violations the CFPB encountered, including cases involving Lighthouse Title and Genuine Title.
“The CFPB’s enforcement actions against companies and individuals for violations of (RESPA) have resulted in more than $75 million in penalties to date,” the release said. “The payment of improper kickbacks and referral fees has been the basis of almost all of those actions. As the bulletin notes, the CFPB intends to continue actively scrutinizing the use of such agreements and related arrangements in the course of its enforcement and supervision work.”
The Title Report will have much more on this, including industry reaction. Stay with us for all the latest.