- January 26, 2015
- Posted by: AGreer
- Category: Government
Wells Fargo & Co. (WFC) and JPMorgan Chase & Co. (JPM) will pay a combined $35.7 million to settle a U.S. regulator’s allegations that their loan officers took illegal kickbacks for steering customers to a now-defunct title company.
More than 100 loan officers at Wells Fargo and six at JPMorgan accepted the improper rewards, which mostly consisted of marketing services and leads on homeowners that might want to refinance their mortgages, the Consumer Financial Protection Bureau said in a settlement filed today. One former Wells Fargo loan officer was accused of accepting cash payments from the company, Genuine Title LLC, that he tried to hide by directing them through his wife, the regulator said.
Wells Fargo agreed to pay $24 million in fines and $10.8 million to compensate customers, while JPMorgan’s payments total $900,000. Neither bank admitted or denied the allegations, which were also made by Maryland’s attorney general.
“These banks allowed their loan officers to focus on their own illegal financial gain rather than on treating consumers fairly,” CFPB Director Richard Cordray said in a statement. “Our action today to address these practices should serve as a warning for all those in the mortgage market.”
The alleged violations of the Real Estate Settlement Procedures Act occurred from 2009 to 2013 in Maryland, Virginia and New York, according to the CFPB. The regulator’s complaint also named former Wells Fargo loan officer Todd Cohen, who was accused of accepting tens of thousands in cash payments through his then-girlfriend, Elaine Oliphant Cohen. The Cohens were fined $30,000, the CFPB said.
In most cases, the kickbacks were for services provided to bank employees who work on commission. Maryland-based Genuine Title “purchased marketing leads — data on consumers likely to refinance a mortgage — from a third-party vendor and provided the leads to loan officers,” according to the agency’s complaint. The company also provided and mailed marketing letters on behalf of the banks’ loan officers, the CFPB said.
Craig Ward, an attorney representing Todd Cohen, declined to comment. A home phone number for the Cohens and a mobile phone number for Elaine Oliphant Cohen were both disconnected.
“We have fully cooperated with the CFPB and have taken strong corrective action, including terminating team members who were involved and enhancing our procedures to provide greater oversight,” said Tom Goyda, a spokesman for San Francisco-based Wells Fargo.
Jason Lobo, a JPMorgan spokesman, said the New York-based bank has fired the two loan officers involved in the scheme who remained employed by the lender. None of the six employees who participated accepted cash, said Lobo, adding that an internal review found the kickbacks related to 191 loans.
“These former employees clearly violated our policies, procedures and training,” Lobo said.
The consumer bureau said another lender had also been involved in the scheme but avoided an enforcement action by voluntarily revealing the practices, firing the involved officials and cooperating in the investigation.