Last September, Michigan title company Lighthouse Title became nationally known when the Consumer Financial Protection Bureau (CFPB) levied a $200,000 penalty against it for entering into what the bureau called “illegal quid pro quo referral agreements” with real estate brokers and others.
According to the CFPB, Lighthouse Title provided marketing and advertising services to its partners “with the agreement or understanding that in return, the counterparties would refer closings and title insurance business” to the title company.
The CFPB was particularly concerned that Lighthouse Title’s marketing service agreements (MSAs) were tied to a specific number of referrals or revenues generated by those referrals, which is not permitted under the Real Estate Settlement Procedures Act (RESPA).
The bureau’s enforcement action was considered to have an immediate chilling effect on MSAs nationwide, and in the months since, attorneys who have issued compliance advice via webinars, newsletters and other educational efforts have publicly said that many of their clients are either revamping their MSA contracts or exiting such agreements altogether.
Lighthouse Title denied any wrongdoing and took exception with the CFPB’s analysis of its MSAs. It signed a controversial CFPB consent order, which ended Lighthouse Title’s MSAs with the brokers and others, and barred it from entering into any MSAs in the future.
Now, Lighthouse Title is regrouping by uniting with a neighboring title company.
This week, Lighthouse Title announced a partnership with Safe Title, a title insurance and settlement specialist with six locations in Holland, Grand Haven, Muskegon, Manistee, Grandville and Grand Rapids. Safe Title has served the West Michigan area since 2004.
Bob Wuerfel
“Safe Title is a great agency with an excellent staff and reputation, and we are pleased to partner with them,” stated Bob Wuerfel, president of Lighthouse Group Title. “They share a similar title culture and business approach with our network.”
With the addition of the Safe Title team, Lighthouse Title’s agency now consists of more than 20 Michigan locations and more than 100 title employees. Its parent company, the Lighthouse Group, also provides business, personal and life insurance across Michigan.
“This is a very good move for us and our customers as it will create operational efficiencies and allow for the blending of two good agencies into a very strong one in each of our six markets,” said Safe Title President Jeff Basil.
“Diversifying in this economy by offering our clients the ability to purchase homeowner’s, auto, business, benefit and life insurance through Lighthouse Group is a unique and exciting model.”
With its partnership announcement, Lighthouse Title seems to be putting the incident behind it.
“As a licensed attorney, their president can also share insights that will strengthen our team as we continue to expand and grow,” Wuerfel noted.
Meanwhile, many have wondered why the CFPB and state authorities did not take action against the brokers and others who played a role in Lighthouse Title’s MSAs, as the Department of Housing and Urban Development made a point to take action against both the givers and receivers of kickbacks when it had regulatory oversight of the real estate industry.
RESPA makes both giving and receiving a “thing of value” in return for the referral of business illegal in mortgage transactions.
Lighthouse Group was founded in Holland, Michigan, in 1995 through the merger of Lighthouse Insurance Agency, founded in 1990, and Keuning Agency, founded in 1960. Its title team was founded in 2001.
Lighthouse Title underwrites with Chicago Title Insurance, Fidelity National Title Co., Old Republic National Title, First American Title Insurance Co. and WFG National Title Insurance.