A Maryland-based title and settlement services company has settled claims that it paid fees to real estate agents and brokers in exchange for customer referrals through joint venture arrangements.

KVS Title created multiple joint venture companies with real estate agents and brokers, including Alliance Title Services, Clear Title Solutions, Eversure Title, Realty Settlement Solutions, Title Pro Group and Washington Title Team, according to a Jan. 14 press release from state Attorney General Anthony Brown.

Those payments violated the federal Real Estate Settlement Procedures Act, as well as the Maryland Real Estate Settlements Act and the Maryland Consumer Protection Act, the release said.

Under the settlement, KVS agreed to dissolve the joint ventures and is barred from creating any new ones. The company will pay $850,000 in restitution and an additional $200,000 to the state's Consumer Protection Division.

Despite the Consumer Financial Protection Bureau taking a more relaxed posture toward federal enforcement, the case signals that RESPA's anti-kickback provision, known as Section 8, remains very much on the radar of state regulators, said Richard Horn, co-managing partner at Garris Horn and a former senior counsel and special advisor in the CFPB's Office of Regulations.

While the settlement does not spell out the specific conduct that triggered the Section 8 violation, joint ventures with real estate companies have increasingly drawn scrutiny from state attorneys general, Horn wrote in a blog post. That trend appears to be playing out across the mid-Atlantic region, he said in an interview.

In August 2024, KVS was one of four title companies that settled title kickback allegations with the District of Columbia attorney general's office; a fifth company reached a settlement the following December. Last January, the Pennsylvania attorney general pursued a mortgage broker over an alleged Section 8 violation.

Lenders and other companies subject to Section 8 outside the region should not assume they are insulated from similar actions, Horn warned. "This might extend to other states also," he said, pointing to Arizona as another jurisdiction where regulators are examining joint ventures.

"Some JVs might be structured in better ways than others," Horn said. "We may be seeing enforcement actions against the ones where companies didn't put as much of a compliance effort into their JV as others."

Section 8 enforcement, particularly around joint ventures, has historically come in waves, often depending on who controls the regulatory agenda.

During the CFPB's early years under former Director Richard Cordray, the agency aggressively targeted marketing services agreements it viewed as potential referral fee arrangements. In 2015, Cordray overruled an administrative law judge and imposed a $109 million fine on PHH over alleged kickbacks tied to reinsurance contracts.

That decision prompted some lenders, including Wells Fargo and Prospect Mortgage, to exit marketing arrangements with real estate companies. While the CFPB never formally banned MSAs, its actions made its position clear. Under a more business-friendly Republican administration, MSAs and joint ventures gradually returned.

The PHH ruling was later overturned, though a federal appellate court upheld the CFPB's constitutionality in 2018 and the agency ultimately dismissed the charges. In 2023, under a Democratic administration, the CFPB again brought a Section 8 case, suing Freedom Mortgage.

Horn also pointed to the growing role of state enforcers. Former CFPB Director Rohit Chopra was hired in December as a senior advisor to the Democratic Attorneys General Association's working group on consumer protection and affordability, where he will help develop strategies for state-level prosecutions of financial firms.

National Mortgage News reached out to KVS for comment.