DAILY REAL ESTATE NEWS | FRIDAY, JANUARY 23, 2015
Government regulators have ordered Wells Fargo and JPMorgan Chase to pay $35.7 million to settle charges for their part in an illegal mortgage marketing kickback scheme that involved a title company that sought consumer referrals from lenders in exchange for cash.
On Thursday, the Consumer Financial Protection Bureau and the Maryland Attorney General’s Office accused a former title company, Genuine Title, of offering the banks’ loan officers cash, marketing materials, and other consumer information in exchange for business referrals. Such actions violate the Real Estate Settlement Procedures Act – RESPA – which prohibits giving a “fee, kickback, or thing of value” in exchange for a referral of business related to a real estate settlement service.
Genuine Title, based in Maryland, closed in April 2014.
“Home owners were steered toward this title company, not because they were the best or most affordable, but because they were providing kickbacks to loan officers who referred consumers to them,” says Maryland Attorney General Brian Frosh. “This type of quid pro quo arrangement is illegal, and it’s unfair to other businesses that play by the rules.”
Regulators have ordered Wells Fargo to pay $24 million, as well as $10.8 million to consumers. JPMorgan will pay $600,000 and another $300,000 in redress to consumers, according to the CFPB.
"These banks allowed their loan officers to focus on their own illegal financial gain rather than on treating consumers fairly,” CFPB Director Richard Cordray said in a statement. “Our action today to address these practices should serve as a warning for all those in the mortgage market.”
Wells Fargo says the bank has taken “strong corrective action” as a result, citing that it’s terminated any involved staff members and that it is improving the monitoring of its processes and team members. JPMorgan issued a statement that said “these former employees clearly violated our policies, procedures, and training.”
Source: “CFPB Takes Action Against Wells Fargo and JPMorgan Chase for Illegal Mortgage Kickbacks,” Consumer Financial Protection Bureau (Jan. 22, 2015) and “U.S. Fines Wells Fargo, JPMorgan Over ‘Illegal Mortgage Kickbacks,’” Reuters (Jan. 22, 2015)