The Consumer Financial Protection Bureau (CFPB) is actively seeking enforcement actions against Marketing Service Agreement (MSA) participants.
Their latest enforcement action occurred last week against Lighthouse Title, a Michigan title company, resulting in a $200,000 civil penalty, forcing Lighthouse Title to cancel all existing MSAs and prohibiting them from entering into future MSAs.
If your brokerage currently participates in MSAs, your broker would be well served to carefully review the findings issued by the CFPB in this order.
Perhaps the most weighted finding by the CFPB stated that Lighthouse Title violated federal law by entering into MSAs with the understanding that, in exchange, the brokerages would refer closings and title insurance business to the title company and, further, by paying those brokerages fees with the understanding that in exchange the brokerages would refer business.
It’s important to note that the CFPB didn’t state that the "understanding" to refer business had to be in the written agreement.
One of the key factors to identifying an "understanding for the referral of business" was a determination that brokerages referred significantly more transactions to the title company when they had an MSA with the title company than when they did not.
Why else would a title company enter into an MSA and pay fees to a brokerage if not for the referral of business? Otherwise, the title company would simply hire a marketing/advertising firm to "market" its services — right?
By its ruling and findings, the CFPB is effectively saying that if MSAs are premised on an understanding that the brokerage will refer business to the paying title company, then the MSA is in violation of federal law.
This week we take a look at a Cape Cod style home with four bedrooms and four bathrooms in over 2,700 feet of living space located just across the DC border in Bethesda, Maryland.
This house has a fireplace in the large living room plus a dining room that opens into a kitchen with stainless steel appliances. The house was built in 1951 and renovated in 2006. It recently dropped in price.
Assuming a homebuyer puts down 20 percent on a conventional loan, her cash to close number will be approximately $212,329.64. The monthly payments would then be around $4,535.03 per month. For a complete picture of the cash to close, or for a run-down of the seller's side of the deal, plug the numbers into the Web version of Close It™ or download the free iOS app.
This week we cross over the District border into Bethesda for this charming 4 bedroom, 3.5 bathroom cape colonial located on a corner lot less than a mile from the Red Line.
The interiors are bright and clean. There's a finished basement. The spacious kitchen features stainless steel appliances with a gas stove as well as granite countertops. It's listed at $899,000.
Assuming a homebuyer puts down 20 percent on a conventional loan, her cash to close number will be approximately $204,574.23. The monthly payments would then be around $4,401.80 per month. For a complete picture of the cash to close, or for a run-down of the seller's side of the deal, plug the numbers into the Web version of Close It™ or download the free iOS app.
For the inaugural edition of Close It!™ House of the Week, we chose a property that's right in our own back yard.
This detached single family home is a brick colonial with a fenced-in English garden located on a tree-lined street in Friendship Heights, Washington, D.C. It has 3 bedrooms and 2.5 baths and is listed for $799,999.
Assuming a homebuyer puts down 20 percent on a conventional loan, her cash to close number will be approximately $183,510.61. The monthly payments would then be around $3,657.70 per month. For a complete picture of the cash to close, or for a run-down of the seller's side of the deal, plug the numbers into the Web version of Close It™ or download the free iOS app.
The Federal Title & Escrow Company team will make every effort to provide its clients with a precise Cash to Close amount, in advance of the closing date, so our clients can arrange for a wire transfer or obtain a cashier’s check for the exact amount.
In some instances, due to last-minute changes in financing or sales contract revisions, the Cash to Close amount will change after the client has already wired her funds or obtained a cashier’s check.
If the change results in an additional Cash to Close amount exceeding $3,000, the law prohibits the client from writing a personal check to Federal Title and the client will be required to wire or obtain a cashier’s check for the additional amount.
DC Code §31-5041.06(d)(3) states, in part, that a title insurance producer may accept a check in an amount not to exceed $3,000 that has not been finally paid before any disbursements.
This means that Federal Title & Escrow Company is prohibited from accepting a personal check at the time of closing that exceeds $3,000.