'Pay-to-play' mortgage kickback scheme results in CFPB action
April 29, 2015
WASHINGTON (4/30/15)--A Maryland-based title company is alleged by the Maryland attorney general and the Consumer Financial Protection Bureau (CFPB) to have engaged in a 'pay-to-play' mortgage kickback scheme.
In a complaint filed in federal court, the CFPB and Maryland allege that executives at Genuine Title, and named loan officers, traded cash and marketing services in exchange for mortgage referrals.
Under proposed consent orders filed Wednesday, if entered by the court, five of the six individual defendants would be banned from the mortgage industry and required to pay a total of $662,500 in redress and penalties. The action will proceed against the remaining defendant.
Specifically, it is alleged the defendants:
Offered services, including purchasing, analyzing and providing data on consumers, and creating letters with the loan officers' contact information that the company printed, folded, stuffed into envelopes and mailed. In return, the loan officers would refer homebuyers to the company for closing services; and
Allegedly received cash payments through companies they created and controlled. To avoid questions if Genuine Title paid cash directly to the loan officers, the company funneled the payments to loan officers through companies created by the loan officers. From 2009 to 2013, cash payments to the loan officers from Genuine Title were arranged in amounts ranging from roughly $130,000 to $500,000.
According to the bureau, Wednesday's actions are the result of a joint investigation by the CFPB, the State of Maryland and the Maryland Insurance Administration, which regulates title-insurance providers such as Genuine Title.