Pay-To-Play Mortgage Kickback Scheme

It seems like every day we are hearing about another enforcement action by the CFPB. This time it was against a Title Company and Mortgage Loan Officers. See announcement from the CFPB here Their scheme is being called a Pay-To-Play Mortgage Kickback Scheme. They knew it was wrong and illegal, if not, why did they create separate companies to funnel the money. Calling them Marketing Services Companies does not avoid liability. The Title Company, Genuine Title, LLC, is no longer in business. The principals are banned from participation in the mortgage industry for 5 years, pay various amounts of penalties and reimbursements, report themselves to the National Mortgage Licensing System and they have to report their movements, address changes, employment etc for 2 to 5 years.

Individually over half a million dollars in penalties will have to be paid. For Genuine Title, after they pay any and all title settlement fees, obligations etc, all remaining money…ALL remaining money to be surrendered to the CFPB as a Civil Money Penalty.

These actions have been illegal for over 40 years. Every participant in the mortgage and real estate industry knows that these are illegal. Creating a mechanism to hide the activity doesn’t work and they will find out. This is not the only Pay-To-Play Mortgage Kickback Scheme going on in our own markets. I recently had a real estate agent argue with me in a Continuing Education Class I was teaching on the subject, that his formation of a Marketing Services Company in order to receive payment from the Title Company made it legal. Sure hope no one was recording that class. Merely quitting now, will not save these people. This particular action on a Pay-To-Play Mortgage Kickback Scheme by the CFPB was for actions and violations from 2009 to 2013.

If you are interested in learning more about violations of § 8(a) of the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2607(a), then come to one of my classes. Make sure  you go to our subscription page to get on our list for class announcements. Currently there are two classes on the calendar for May, May 13th and May 14th, flyers and emails to go out in the next couple days.

About Kevin Hardin

Kevin W. Hardin is a 22 year veteran of the Mortgage and Real Estate industries. He holds a Juris Doctor (JD) degree from Concord Law School and a CMB (Certified Mortgage Banker) from the Mortgage Bankers Association. He is a Senior Loan Officer at HomeStreet Bank. He works with Borrowers, Attorneys, Title Companies, Real Estate Agents and Mortgage Companies on mortgage law issues.

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