Big banks to pay feds $36m settlement over kickback scheme

The CFPB and the Maryland Attorney General’s office took action against loan officers at the two banks for an illegal marketing kickback scheme in which the banks received money, marketing materials and customer information from a company called Genuine Title in exchange for referrals for their business. The Maryland-based Genuine Title provided real-estate closing services until it failed in April 2014.

“These banks allowed their loan officers to focus on their own illegal financial gain rather than on treating consumers fairly,” said CFPB Director Richard Cordray. “Our action today to address these practices should serve as a warning for all those in the mortgage market.”

According to the CFPB, Genuine Title would conduct marketing for the banks, going so far as to analyze consumer data and mail letters to consumers on the banks’ letterhead to potential customers. In return, bank loan officers would steer homebuyers to Genuine Title for closing services, in violation of the Real Estate Settlement Procedures Act.

Maryland Attorney General Brian Frosh said this “type of quid pro quo arrangement is illegal, and it’s unfair to other businesses that play by the rules.”

More than 100 loan officers at Wells Fargo were involved in the scheme, according to the CFPB. The announcement of the settlement specifically named one loan officer, Todd Cohen, who with his wife received tens of thousands of dollars in kickbacks.

Under the terms of the settlement, Wells Fargo would have to pay $24 million in civil penalties and another $10.8 million in redress to consumers whose loans were affected.

JPMorgan Chase also referred business to Genuine Title on almost 200 loans, according to the CFPB. The bank would have to pay $900,000 in penalties and redress.

Correction: This article has been corrected to reflect that loan officers at the banks were accused.