WASHINGTON (1/23/15)--Consent orders proposing $35.7 million in payments from Wells Fargo and JPMorgan Chase were filed Thursday in federal court by the Consumer Financial Protection Bureau (CFPB).
The bureau, along with the Maryland Attorney General, took action against the two firms for what it alleges is an illegal marketing services kickback scheme with the now-defunct Genuine Title.
The CFPB alleges Genuine Title gave the banks' loan officers cash, marketing materials and consumer information in exchange for business referrals. According to the bureau, these were offered in order to increase the amount of loan business generated.
"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."
The proposed consent orders would require $24 million in civil penalties from Wells Fargo, $600,000 in civil penalties from JPMorgan Chase and $10.8 million in redress to consumers whose loans were involved in the scheme.
An investigation by the CFPB revealed more than 100 Wells Fargo loan officers in at least 18 branches, mostly in Maryland and Virginia, participated in the scheme.
The investigation also found that at least six JPMorgan Chase loan officers in three different branches in Maryland, Virginia and New York were involved in referring settlement business on almost 200 loans to Genuine Title.
Action also has been taken against former Wells Fargo employee Todd Cohen and his wife, Elaine Oliphant Cohen, for their involvement. The bureau alleged that Cohen took "substantial cash payments" in exchange for referrals. Genuine Title allegedly made tens of thousands of dollars in payments to Oliphant Cohen "in an effort to disguise the kickback nature of the payment."
The two would be required to pay a $30,000 penalty under the consent order, and Cohen would be banned from participation in the mortgage industry for two years.