By Outside Counsel, Chrys D. Lemon, McIntyre & Lemon, PLLC
The CFPB took action against two large banks and their employees for participating in an allegedly illegal marketing-services-kickback scheme with a title company.
According to the CFPB, the title company “gave the banks’ loan officers cash, marketing materials, and consumer information in exchange for business referrals. The proposed consent orders, filed in federal court, would require $24 million in civil penalties from [one of the banks], $600,000 in civil penalties from [from the other bank], and $11.1 million in redress to consumers whose loans were involved in this scheme.”
The title company “was a Maryland-based title company that offered real-estate-closing services from 2005 until it went out of business in April 2014. As part of the marketing-services-kickback scheme, [the title company] offered loan officers valuable services to increase the amount of loan business generated. . . . The services the company offered included purchasing, analyzing, and providing data on consumers and creating letters with the banks’ logos that the company had printed, folded, stuffed into envelopes, and mailed. In return, the banks’ loan officers would . . . [refer] homebuyers to the company for closing services. This scheme was especially profitable for the loan officers, who generally are paid by commission.”
The CFPB found this “marketing-services-kickback scheme [to be a violation of] 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.”
Read the CFPB Press Release, Complaint, Consent Order 1, Consent Order 2.