Many prospective homeowners see the residential real estate market as a maze of red tape, paperwork, and endless bargaining. It’s no surprise, therefore, that California real estate agents are often called upon to give prospective buyers advice. The questions don’t just concern housing values, the quality of local school districts, and the levels of area property taxes; they often relate to mortgage lending. While real estate agents often have a wealth of information about current mortgage conditions and practices, both the agent and the mortgage firm can get into deep trouble if they maintain anything less than an arm’s length relationship. Mortgage firms and real estate agents shouldn’t get too cozy with each other.

Consumer Financial Protection Bureau Levies Steep Fine Against California Mortgage Lender

On January 31, 2017, the Consumer Financial Protection Bureau (CFPB) reported that it had taken action against a major California mortgage lender for paying what it labeled “illegal kickbacks” for mortgage business referrals. Under the terms of a CFPB consent order, the lender will pay a $3.5 million civil penalty and various real estate brokers, and a mortgage loan servicer will pay a combined $495,000 in consumer relief and penalties.

CFPB’s Allegations Were Far-Reaching

The CFPB alleged that the California lender used a variety of schemes to pay kickbacks for referrals of mortgage business in violation of the Real Estate Settlement Procedures Act. It alleged, for example, that the lender established marketing services agreements with some companies, which were framed as payments for advertising or promotional services, but which were created to disguise payments for referrals. The CFPB also contended that the lender:

•  Paid for referrals through agreements with more than 100 real estate brokers

•  Paid brokers to require consumers – many of whom were already prequalified with another lender – to prequalify as well with the lender

•  Split fees with a mortgage servicer in order that the lender might obtain consumer referrals

CFPB Actively Pursuing Many Other Cases

According to the CFPB, the agency has helped recover more than $11.7 billion since its creation, assisting more than 27 million consumers, and resolving more than one million complaints. According to the government entity, it makes sure banks, lenders, and other financial companies treat American consumers fairly. Quite a few lenders and others argue that CFPB’s methods are often heavy-handed.

CKB VIENNA LLP: Experienced Financial Services Attorneys

Because the attorneys at CKB VIENNA LLP have such a broad financial services practice, the firm has the experience to provide lenders, servicers, and others with in-depth advice regarding the CFPB and its practices. Our firm has been active in monitoring developments at the CFPB and other government agencies. We have helped financial clients with compliance with the Dodd-Frank Act, with Truth in Lending issues, and with other important legal matters related to mortgage lending.

We can provide financial entities with an important, dispassionate perspective when it comes to potential CFPB exposure. We can examine your practices and advise what changes, if any, ought to be made to strengthen your position in regulatory matters. Our team understands the complexity of the issues and stands ready to represent you aggressively. We have offices in Rancho Cucamonga, San Bernardino, and Los Angeles. Contact us by telephone – 909.980.1040 – or complete our online form.

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