The Consumer Financial Protection Bureau (CFPB) is tightening its regulation of Real Estate Settlement Procedures Act (RESPA) violations, according to a recent report by Weiner Brodsky Kider PC on JDSupra. The CFPB issued consent orders against a significant independent mortgage banker and a real estate brokerage firm on August 17, 2023, based on allegations of kickbacks for mortgage referrals, marking yet another development in its efforts to reassert compliance within industry practices.
The move has seen the Bureau once again turning its attention to Section 8 of RESPA. This section specifically prohibits the giving or receiving of anything of value in exchange for the referral of settlement service business pertaining to a federal mortgage loan. The violations alleged in this case involve event tickets, Marketing Service Agreements (MSAs), and online subscriptions.
The Consent Orders come with hefty penalties: $1.75 million against the mortgage company and $200,000 against the real estate brokerage firm. Beyond the monetary punishments, these orders also encapsulate other compliance obligations for the companies involved, in an attempt to ensure future adherence to RESPA and avoid such violations.
Such actions by the CFPB stand as a clear signal to companies dealing in real estate and mortgage services of the robust regulatory environment they operate in, and the severe consequences that can follow violations of the RESPA. As such, all mortgage companies and real estate firms should be aware of the rules in place and prioritize ensuring compliance to avoid similar implications.