CFPB Takes Enforcement Action Against Mortgage Lender and Real Estate Brokerage for RESPA Violations

On August 17, 2023, the CFPB announced that it had taken enforcement action against a Florida-based mortgage lending and servicing corporation, as well as a New York-based real estate brokerage firm, issuing consent orders against the businesses for “exchanging things of value return for mortgage loan referrals”, in violation of Section 8(a) Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. § 2607(a), and its implementing regulation, 12 C.F.R. part 1024.

The CFPB specifically alleged that the mortgage lender entered into “marketing services agreements” with real estate brokerages, purportedly in exchange for marketing services. According to the CFPB, the agreements with the brokerages, including the New York real estate brokerage that was also found to be in violation of RESPA in the separate consent order, were used as a method “to pay for mortgage referrals, rather than compensate the brokerages for marketing services they actually performed.” The CFPB also alleged that the mortgage lender provided subscription services, hosted events, and provided gifts to brokerages that participated in the alleged scheme. These exchanges, labelled as “kickbacks” by the CFPB, allegedly violated Section 8(a) of RESPA’s prohibition on accepting things of value for referrals of business incident to or part of a settlement service involving federally related mortgage loans.

Pursuant to the terms of the consent order, both corporations have agreed to cease providing or accepting items of value in exchange for mortgage referrals. Additionally, the order provides that the mortgage servicer will pay a $1.75 million penalty into the CFPB victims relief fund, and the real estate brokerage agreed to pay a $200,000 civil penalty. ​