More players have settled in a case involving alleged illegal kickbacks for referring borrowers to title insurance companies.
In January, Wells Fargo Bank, N.A., and JPMorgan
Chase Bank, N.A., agreed to settle allegations by the Consumer Financial Protection Bureau of illegal kickbacks.
According to the CFPB, loan originators at the pair of banks and other mortgage firms referred
business to the now-defunct Genuine Title LLC in exchange for cash, marketing materials and consumer information.
Such compensation is in violation
of the Real Estate Settlement Procedures Act.
In all, the CFPB extracted $3.573 million from the settlement — with Wells Fargo paying the bulk of the amount.
On Wednesday, the CFPB announced that additional settlements have been reached in the case.
Proposed consent orders with five individuals call for $662,500 in redress and penalties.
Among the five defendants named in a federal complaint filed by the bureau and the state are Jay Zukerberg,
the founder and owner of Genuine Title, and Brandon Glickstein, who was director of marketing at the title agency. Both are banned from the mortgage industry for five years.
The other three defendants — Adam Mandelberg, William Peterson and Angela Pobletts — were all loan originators in the Baltimore area.
Peterson was additionally the owner of a mortgage brokerage. The trio is banned from the mortgage industry for two years.
“Secret and unlawful payments keep consumers in the dark and put honest businesses at a disadvantage, and the Consumer Bureau will continue to take action against them,” CFPB Director Richard Cordray stated in yesterday’s announcement.
“This quid pro quo arrangement harmed homeowners as well as other businesses that play by the rules,” Maryland Attorney General Brian E. Frosh said in the news release.
The CFPB said action is proceeding against a sixth defendant, Gary Klopp.
The action coincided with
an announcement from New York Governor Andrew M. Cuomo about new state regulations intended “to crack down on kickbacks and other improper expenditures (such as excessive meal and entertainment expenses) in the title insurance industry.”
New York’s actions followed a state investigation that found such activities are inflating title insurance premiums.
“Our investigation uncovered that title insurance companies paid for lavish meals and entertainment on the dime of consumers, which inflated premiums,” New York Superintendent of Financial Services Benjamin M. Lawsky said in the statement.
As a result of the regulations — which prohibit meals, entertainment, vacations and gifts as well as markups of some fees —
title insurance closing costs are expected to fall by up to 20 percent on purchase financing and up to 60 percent on refinances.
