CFPB Takes Action Against Small Lender, President For RESPA Violations


On January 16, in the CFPB’s first settlement of 2014, the agency ordered a non-depository mortgage lender and its former owner to pay $81,076 for violating section 8 of the Real Estate Settlement Procedures Act (RESPA). The lender and its former owner—who currently serves as the company’s president—allegedly provided illegal kickbacks to a bank in exchange for loan referrals, disguised as inflated lease payments for renting office space within the bank. RESPA prohibits, among other things, the receipt or payment of kickbacks for settlement referrals involving federally-related mortgages. The consent order requires the company and its president to forfeit all proceeds from the allegedly unlawfully referred business—a total of $27,076 in origination fees related to 20 loans—and pay a $54,000 civil penalty.

The action extends two of the CFPB’s most recently-active enforcement patterns: RESPA section 8 and individuals. The CFPB press release announcing the action warns that the Bureau will “continue to enforce RESPA’s anti-kickback provisions” and “take action against schemes that steer consumers to lenders through unscrupulous and illegal business practices.”

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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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