Need to Know: CFPB Consent Orders

On January 31, the Consumer Financial Protection Bureau (CFPB) announced that it entered into consent orders with a mortgage lender, mortgage servicer and two real estate brokers for violations of the Real Estate Settlement Procedures Act (RESPA). As part of the consent orders, the four companies agreed to pay $4 million. The two brokerage firms involved will pay a total of $85,000 in penalties and one will pay $145,000 in disgorgement.

The CFPB allegations said that the mortgage lender entered into illegal kickback agreements for referrals of business. The three main agreements that the CFPB targeted were:

  1. Paid referrals through agreements – the mortgage lender tracked the number of referrals made by each broker and adjusted the amount paid under agreements accordingly.
  2. Paid brokers to require consumers to prequalify with them – Under lead agreements, listing brokers and agents would require consumers to prequalify with the mortgage lender, even if they had been prequalified by another lender.
  3. Split fees with mortgage servicer – the mortgage lender had an agreement with a mortgage servicer to split profits on any refinance referrals the servicer provided.

At this time, it is unclear whether the CFPB will take further action against the “more than 100 brokers” they allege have similar agreements. The CFPB’s press release, and consent orders, can be found here. Stay tuned for more Virginia REALTORS® resources on this important issue.

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