BUILDER AND BANKS WERE FINED FOR VIOLATION OF RESPA
Builder was fined for receiving Kickbacks for referring mortgage
origination
In today’s market, new build homes market are hot, are in demands
and in many areas, e.g., North Texas, there are shortages of new
build homes. Many Builders have required in the past and are still
requiring now that the purchasers get pre-approved by one of their
preferred lenders or banks. Though they cannot force a purchaser to
get the loan from their preferred lender at the end, but many times
they offer many good incentives that getting a lone from their
preferred lender becomes very attractive. No matter what, per RESPA
(Real Estate Settlement Procedures Act), builders cannot receive
money from lenders for their referrals (No kickbacks). Similarly,
lenders cannot pay to builders for their referrals.
Just few days ago,
on May 17th, 2013, The
Consumer Financial Protection Bureau "CFPB" ordered a Texas
homebuilder, Paul Taylor, to pay $118,194.20 that he had received in
kickbacks for referring mortgage origination business to Benchmark
Bank and to Willow Bend Mortgage Company in violation of Section
8(a) of the real estate settlement procedures act "RESPA". The CFPB
also prohibited Paul Taylor from engaging in future real estate
settlement services, including mortgage origination, for a period of
five years from the date of this Order.
Benchmark Bank
(“Bank”) is a bank chartered under Texas law, based in Plano, Texas,
and insured by the Federal Deposit Insurance Corporation (“FDIC”).
During the Relevant Time Period, the Bank originated home mortgages.
The Federal
Deposit Insurance Corporation "FDIC" referred the incident to the
CFPB. The FDIC imposed a civil money penalty on the Benchmark Bank
after the FDIC “determined that the
Bank violated [RESPA]
by creating and operating a company that was used by [the Bank] as a
conduit for paying unlawful referral fees … for the referral of
mortgage loan customers to the Bank.”
The CFPB
settlement can be viewed by clicking
here.
|
