WASHINGTON – Wells Fargo and JPMorgan Chase have agreed to pay more than $35 million combined to resolve claims that loan officers at the two banks received kickbacks in exchange for steering mortgage borrowers to a Maryland title company.
The Consumer Financial Protection Bureau said Thursday that JPMorgan and Wells Fargo each agreed to consent orders filed in federal court to settle the claims.
Wells Fargo has agreed to pay $24 million in civil penalties and $10.8 million to consumers affected by the scheme. JPMorgan is to pay $600,000 in penalties and about $300,000 in redress.
The CFPB and the Maryland attorney general found that loan officers at the banks referred borrowers to a now-defunct title company, Genuine Title, in exchange for cash and marketing services.
Federal law prohibits giving anything of value in exchange for a referral of business related to a real estate settlement service.
According to the CFPB, loan officers at Wells Fargo and JPMorgan sent homebuyers financing a mortgage through the banks to Genuine Title, which provided real estate closing services.
In return, the title company, which went out of business last April, provided the loan officers with cash, as well as consumer information and marketing services aimed at helping them drum up more loan business, the CFPB said.
“These banks allowed their loan officers to focus on their own illegal financial gain rather than on treating consumers fairly,” said CFPB Director Richard Cordray.
The CFPB noted that more than 100 Wells Fargo loan officers in at least 18 branches, mainly in Maryland and Virginia, participated in the scheme, referring thousands of loans to Genuine Title.
The agency also contends that Wells Fargo failed to stop the scheme, even though it had multiple warnings of what was going on, including a federal lawsuit that alleged the bank’s loan officers had illegal arrangements with the title company.
In a statement, Wells Fargo spokesman Tom Goyda said the bank has fully co-operated with the CFPB, fired the employees who were involved in the scheme and taken steps to enhance its procedures to provide greater oversight and monitoring of both the process and its employees.
The agency found that at least six Chase loan officers in three different branches in Maryland, Virginia and New York were involved in the scheme.
Jason Lobo, a spokesman for Chase Mortgage Banking, said the bank’s own investigation into the kickback scheme found six of its mortgage loan officers received marketing services, though not any cash, in return for steering borrowers on 191 loans to Genuine Title.
“We also found no evidence that borrowers incurred title fees in excess of the market rates,” he said.
Four of the Chase loan officers had left the bank when the scheme was uncovered. The bank fired the two others who remained, Lobo noted.