On September 25, 2014, the CFPB entered into a Consent Order with a Michigan title insurance agency to settle charges that the title agency entered into certain Marketing Services Agreements (“MSAs”) in violation of the Real Estate Settlement Procedures Act. This Consent Order provides three valuable takeaways for parties that have entered into MSAs with third parties. First, the parties must document how they determined the “fair market value” of the services provided under the agreement. This can be accomplished as a part of the agreement itself or in a separate document. Second, fees paid under the agreement cannot be based in any way on how many referrals or applications result. Third, these relationships must be monitored on a regular basis to ensure that the party that has contracted to provide marketing services is actually performing those services. Quarterly review should be provided for in the agreement.
Originally posted December 10, 2014