Executives & Loan Officers Must Pay $600K For Being Part Of Illegal Mortgage Kickback Scheme

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(Steven Depolo)

Nearly five months after Wells Fargo and JPMorgan Chase agreed to pay more than $35 million – including $11.1 million in redress to affected consumers – for their part in an illegal mortgage kickback scheme, the purported masterminds behind the “pay-to-play” arrangement are finally facing action from federal regulators for their shady dealings.

The Consumer Financial Protection Bureau, along with the Maryland Attorney General, announced today that they reached a proposed deal with five of the six defendants previously working as executives for now-defunct title company Genuine Title and loan officers for various bank branches, that would bar them from the mortgage industry and require them to pay a total of $662,500 in penalties and refunds to affected consumers.

The proposed consent order stems from the individuals’ part in real estate closing company Genuine’s years-long scheme to provide cash, marketing materials and consumer information in exchange for mortgage referrals.

Under federal law, companies and individuals are prohibited from giving or receiving kickbacks in exchange for a referral of business related to a real-estate-settlement service.

According to the CFPB’s complaint [PDF], Jay Zukerberg, the owner of Genuine Title, along with director of marketing Brandon Glickstein, developed the scheme to win over more business.

The company offered to complete marketing duties for loan officers, such as 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 exchange for performing these services, loan officers working in the greater Baltimore area would refer homebuyers to the company for closing services.

At times when marketing services were not needed, the four loan officers named in today’s order would receive cash kickbacks from Genuine.

The CFPB and Maryland AG’s office allege that because Zukerberg and Glickstein knew it would look “fishy” if Genuine paid cash directly to the officers, they devise an operation in which the payments were funneled through companies owned by the four loan officers.

In all, the complaint alleges that Zukerberg and Glickstein arranged for cash payments to the loan officers from Genuine Title in amounts ranging from about $130,000 to $500,000.

The proposed enforcement order, if accepted by the court, requires Zukerberg to be banned from the mortgage industry for five years and pay $130,000 in redress and penalties. Glickman would also be banned from the mortgage industry for five years and required to pay $300,000 in redress.

Three of the four named loan officers would be banned from the industry for two years and must pay redress ranging from $30,000 to $65,000 each. The fourth loan officer declined to settle with the CFPB and attorney general and as a result action will proceed against the individual, the CFPB says.

The CFPB and state of Maryland’s action previously reached deals with the banks where the loan officers were employed, after investigators found more than 100 employees of Wells Fargo and JPMorgan Chase were allegedly involved in illegal tit-for-tatting with Genuine Title.

Wells Fargo agreed to pay $10.8 million in redress to consumers whose loans were involved in this scheme, along with another $24 million in civil penalties. For it’s part, JPMorgan Chase agreed to pay back approximately $300,000 to affected consumers and $600,000 in civil penalties.

CFPB and State of Maryland Take Action Against “Pay-To-Play” Mortgage Kickback Scheme [CFPB]

by Ashlee Kieler via Consumerist