The Consumer Financial Protection Bureau (CFPB) announced yesterday that it settled a lawsuit against Prospect Mortgage, LLC, two real estate brokers and a mortgage servicer for an illegal kickback scheme.
Prospect was accused of paying illegal kickbacks to various real estate and mortgage firms for mortgage business referrals. As part of the settlement, Prospect will pay a $3.5 million civil penalty, and the real estate brokers and servicer will pay a combined $495,000 in consumer relief, repayment of ill-gotten gains, and penalties, according to the CFBP.
The kickbacks that were illegally paid out by Prospect from at least 2011 through 2016. They were disguised as marketing fees on borrower closing statements. Some of the over 100 companies involved in the scheme were RGC Services, Inc., (doing business as ReMax Gold Coast), based in Ventura, Calif., and Willamette Legacy, LLC, (doing business as Keller Williams Mid-Willamette), based in Corvallis, Ore., and Planet Home Lending, LLC.
The CFPB is responsible for enforcing the Real Estate Settlement Procedures Act, which enacted in 1974 to help eliminate kickbacks or referral fees in the real estate and mortgage business that drive up costs for consumers.
The CFPB investigation found that Prospect paid for referrals through various agreements with over 100 real estate brokers whom they also paid to require consumers and the company split fees with a mortgage servicer to obtain consumer referrals and then Prospect also sent the resulting mortgage servicing rights back to Planet.
“Today’s action sends a clear message that it is illegal to make or accept payments for mortgage referrals,” said CFPB Director Richard Cordray. “We will hold both sides of these improper arrangements accountable for breaking the law, which skews the real estate market to the disadvantage of consumers and honest businesses.”
The consent order filed against Prospect Mortgage is available at: http://files.consumerfinance.gov/f/documents/201701_cfpb_ProspectMortgage-consent-order.pdf
The consent order filed against ReMax Gold Coast is available at: http://files.consumerfinance.gov/f/documents/201701_cfpb_RGCServices-consent-order.pdf
The consent order filed against Keller Williams Mid-Willamette is available at: http://files.consumerfinance.gov/f/documents/201701_cfpb_Willamette-Legacy-consent-order.pdf
The consent order filed against Planet Home Lending is available at: http://files.consumerfinance.gov/f/documents/201701_cfpb_PlanetHomeLending-consent-order.pdf