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CFPB Acts Against Mortgage Servicer for Illegal Kickback Scheme

Thu 09 Feb, 2017  /  by McIntyre & Lemon  /   Client Alerts

02/09/17 – The Consumer Financial Protection Bureau (CFPB) has taken action against a major mortgage lender for paying illegal kickbacks for mortgage business referrals.

The California-based mortgage servicer is one of the largest independent retail mortgage lenders in the United States, with nearly 100 branches nationwide. The company offers a range of mortgages to consumers, including conventional, FHA, and VA loans.

From at least 2011 through 2016, the defendant allegedly used a variety of schemes to pay kickbacks for referrals of mortgage business in violation of the Real Estate Settlement Procedures Act. For example, according to the CFPB, the defendant established marketing services agreements with companies, which were framed as payments for advertising or promotional services, but were actually used to disguise payments for referrals.

The CFPB also took action against two real estate brokers and a mortgage servicer that took illegal kickbacks from the defendant. The CFPB’s investigation found that the companies accepted illegal payment for referrals. The companies were among more than 100 brokers who had marketing services agreements, lead agreements, and desk-license agreements with the defendant, which were, in whole or in part, vehicles to obtain illegal payments for referrals.

Under the terms of the consent orders filed, the defendant will pay a $3.5 million civil penalty for its illegal conduct, and the real estate brokers and servicer will pay a combined $495,000 in consumer relief, repayment of ill-gotten gains, and penalties.

CFPB Press Release, Consent Order 1, Consent Order 2, Consent Order 3, Consent Order 4.