On January 22, 2015, the Consumer Financial Protection Bureau (CFPB) and the Maryland Attorney General filed proposed consent orders in the District of Maryland with two large lenders for an alleged kickback scheme with a title company, Genuine Title. The CFPB’s Complaint alleged that the banks’ loan officers across multiple branches “referred loans for closing to Genuine Title” in exchange for “cash payments,” “consumer data,” and “marketing materials,” thereby violating Section 8(a) of the Real Estate Settlement Procedures Act (RESPA), which prohibits “accept[ing] any fee, kickback, or thing of value” in exchange for a business referral involving a “real estate settlement service.” Violations of Section 1036(a)(1)(A) of the Consumer Financial Protection Act of 2010 and Section 13-303 of the Maryland Consumer Protection Act were also alleged.
The banks agreed to implement CFPB-approved compliance plans and pay $24 million in civil penalties and $11.1 million in redress to affected consumers, though the banks did not admit or deny the allegations. In return, the banks were released and discharged from all potential liability for violations that the CFPB “has or might have asserted based on the practices alleged in the Complaint, to the extent such practices occurred before the Effective Date and the [CFPB] knows about them as of the Effective Date.”
The CFPB’s Complaint also mentioned that a third “Unnamed Financial Institution” was involved in the alleged kickback scheme. But, the CFPB indicated that it did not bring any enforcement action against that entity, “consistent with the CFPB’s Bulletin on Responsible Business Conduct,” because that entity “self-identified the problematic practices and terminated the loan officers involved,” and “cooperated with the CFPB’s investigation and self-initiated a remediation plan.” On the other hand, the CFPB’s Complaint asserted that the two bank defendants “did not have an adequate system in place to identify violations of RESPA resulting from the Marketing Services Scheme.”
This enforcement action continues the CFPB’s focus on how loan officers are compensated, which we have previously covered here.