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CFPB Charges Wells Fargo and JPMorgan With RESPA Violations

Jan 22, 2015

The Consumer Financial Protection Bureau (CFPB) has joined forces with Maryland Attorney General Brian Frosh against banking titans, Wells Fargo and JPMorgan Chase, charging them with violating the Real Estate Settlement Procedures Act (RESPA) by running an illegal kickback scheme in conjunction with the now-defunct Genuine Title. In proposed consent orders filed today in federal court, the CFPB and Frosh’s office are seeking $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 this scheme.

Also being charged is Todd Cohen, a former Wells Fargo loan officer, along with his wife Elaine Oliphant Cohen. Under the proposed consent orders, they would be required to pay a $30,000 fine.

According to the CFPB, Genuine Title was a Maryland-based title company that offered real-estate-closing services that went out of business in April 2014. The agency accused the companies of operating a marketing-services-kickback scheme, where Genuine Title offered loan officers services that resulted in an increased amount of loan business. Genuine Title allegedly purchased, analyzed and provided data on consumers and even went so far as to generate letters with the banks’ logos that it then mailed to prospective borrowers. The banks, in turn, referred homebuyers to General Title for its closing services. Such actions violated RESPA provisions against a “fee, kickback, or thing of value” in exchange for referrals related to a real-estate-settlement service.

Todd Cohen was employed by Wells Fargo between April 2009 through August 2010, and the CFPB accused him of taking “substantial cash payments in exchange for referrals.” Elaine Oliphant Cohen was charged in participating in a subterfuge by receiving payments from Genuine Title that were destined for her husband for his referrals. The CFPB and Frosh are also seeking to have Todd Cohen banned from mortgage banking for two years.

“Today, we took action against two of the nation’s largest banks, Wells Fargo and JPMorgan Chase, for illegal mortgage kickbacks,” said CFPB Director Richard Cordray in a statement issued by his office. “These banks allowed their loan officers to focus on their own illegal financial gain rather than on treating consumers fairly. Our action today to address these practices should serve as a warning for all those in the mortgage market.”

“Homeowners were steered toward this title company, not because they were the best or most affordable, but because they were providing kickbacks to loan officers who referred consumers to them,” said Maryland Attorney General Brian Frosh. “This type of quid pro quo arrangement is illegal, and it’s unfair to other businesses that play by the rules.”

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Jan 22, 2015
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