CFPB Takes Action Against Real Estate Kickbacks Under RESPA

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The CFPB has ordered a Texas homebuilder, Paul Taylor, to surrender more than $100,000 he received in kickbacks for referring mortgage origination business to Benchmark Bank and to Willow Bend Mortgage Company. The Bureau is also prohibiting Taylor from engaging in future real estate settlement services, including mortgage origination.

According to the CFPB, Paul Taylor received illegal referral fees through partnerships with Benchmark Bank and Willow Bend Mortgage Company. Taylor and the bank created and jointly owned Stratford Mortgage Services, LC, which claimed to be a mortgage originator. Similarly, Taylor and Willow Bend created and jointly owned PTH Mortgage Company. According to the CFPB, both entities were shams designed to allow Taylor to receive the kickbacks. His homebuilding company, Paul Taylor Homes, then referred mortgage origination business to the sham entities. However, the work was actually performed by the Bank and Willow Bend. The kickbacks were passed through the sham entities back to Taylor through profit distributions and as a payment through a “service agreement.”

The settlement resolves violations of the Real Estate Settlement Procedures Act, or RESPA. RESPA prohibits giving and receiving kickbacks for services involving federally related mortgages.

The CFPB became aware of Taylor’s conduct related to Benchmark Bank and Stratford through a referral from the Federal Deposit Insurance Corporation, or FDIC. The FDIC separately fined Benchmark Bank for its role in the RESPA violations.

Check dodd-frank.com frequently for updated information on the JOBS Act, the Dodd-Frank Act and other important securities law matters.

Topics:  CFPB, Kickbacks, Real Estate Market, RESPA

Published In: General Business Updates, Consumer Protection Updates, Finance & Banking Updates, Residential Real Estate Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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