CFPB fines Wells Fargo, JPMorgan $36 million for ‘illegal mortgage kickbacks’

The Consumer Financial Protection Bureau assessed nearly $36 million in penalties against Wells Fargo and JPMorgan Chase for the banks’ role in a “mortgage kickback” scheme.

The financial regulator charged bank employees with entering into an illegal arrangement with a now-defunct Maryland mortgage title company, under which the title company gave cash, marketing materials and consumer information in exchange for bank business.

{mosads}“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,” said CFPB Director Richard Cordray.

Under the terms of the settlement, Wells Fargo agreed to pay $24 million in civil penalties, and JPMorgan would pay another $600,000. The banks will also provide $11.1 million in redress to impacted consumers, and a bank employee and his wife will pay a $30,000 penalty.

The CFPB determined in its investigation that more than 100 Wells Fargo loan officers in Maryland and Virginia entered into the illegal arrangement, and another six loan officers from JPMorgan did as well.

According to the agency, a third financial institution also had employees participating in the scheme, but that bank was not identified as it self-identified the issue, reported it to regulators and fired the employees involved.

The CFPB specifically fined one Wells Fargo employee for receiving cash payments as part of a business referral arrangement. The regulator said “tens of thousands of dollars” were given to the loan officer but were routed through his wife to disguise the nature of the compensation.

Under the Real Estate Settlement Procedures Act, businesses are barred from referring real estate settlement services to specific companies in exchange for a “fee, kickback, or thing of value.”