On June 12, the CFPB announced that it has issued a Consent Order under which a New Jersey title services company, Stonebridge Title Services Inc., agreed to pay a $30,000 civil money penalty for paying illegal kickbacks for referrals in violation of RESPA Section 8. 

According to the CFPB’s press release, Stonebridge paid commissions to more than twenty independent salespeople who referred title insurance business to the company.  Stonebridge paid referral commissions of up to 40% of the title insurance premiums it received from consumers to the individuals who solicited title insurance business for the company.  The amount of the commission was based on the value of the title insurance premiums multiplied by a commission percentage agreed to beforehand between Stonebridge and the independent salespersons.  

Although the individuals who referred business to Stonebridge received W-2s, the CFPB determined that they were not “employees” who are allowed to collect commissions from employers for referrals under 12 C.F.R. § 1024.14(g)(1)(vii).  According to the CFPB, the individuals acted as independent contractors and Stonebridge did not have the right or power to control the manner and means by which they performed their duties. 

The settlement bars the title services company from taking a tax deduction or credit for the civil money penalty or from seeking or accepting reimbursement or indemnification for the penalty, including under any insurance policy. 

Similar to other recent CFPB Section 8 enforcement actions we have reported on involving a law firm, home builder, national mortgage insurers, and a mortgage lender, this matter was not initiated by the CFPB, but was referred to the CFPB from another agency.  In this particular settlement, the matter was referred to the CFPB by HUD.