Wells Fargo will pay more than $16 million to settle a class action lawsuit brought against the megabank by customers of Genuine Title, who accused the bank of accepting kickbacks from Genuine Title in in exchange for business referrals.
This settlement marks the second punitive action against Wells Fargo for its dealings with Maryland-based Genuine Title, a now-defunct title company.
Just over a year ago, the Consumer Financial Protection Bureau and the Maryland Attorney General fined Wells Fargo and JPMorgan Chase nearly $36 million for the alleged kickback scheme that involved Genuine Title giving the banks’ loan officers cash, marketing materials and consumer information.
The CFPB settlement required Wells Fargo to pay $24 million in civil penalties and $10.8 million in redress, but more than 9,000 of the affected customers filed a class action lawsuit against Wells Fargo, which the bank agreed to settle for $16.2 million.
When the CFPB settlement was announced, the CFPB stated that its investigation identified more than 100 Wells Fargo loan officers in at least 18 branches, largely in Maryland and Virginia, who participated in this scheme.
As part of the scheme, the title company offered loan officers “valuable services” to increase the amount of loan business that was generated.
In return, the banks’ loan officers would increase Genuine Title’s profits by referring homebuyers to the company for closing services, the CFPB said last year.
According to a release from the attorneys representing the victims, Wells Fargo becomes the first to settle a class action lawsuit involving kickbacks from Genuine Title.
The attorneys, Smith, Gildea & Schmidt, LLC andJoseph, Greenwald & Laake, PA, stated that they have outstanding cases against nine banks/mortgage companies, Genuine Title and three of its “sham marketing companies.”
The attorneys stated that Wells Fargo is responsible for the payment of the settlement funds, which is to be awarded within 90 days after finality of the settlement.
“It is gratifying to help those who were victimized unknowingly by Genuine Title,” said Michael Paul Smith, a partner with Smith, Gildea & Schmidt. “These types of back room deals have no business in the real estate industry.”
In a statement provided to the Baltimore Business Journal, Wells Fargo said that it has “made fixes” to its process in the wake of the settlements.
"This settlement resolves consumer claims related to the same issues involving Genuine Title that were addressed in a January 2015 consent order with the Consumer Financial Protection Bureau, and puts this entire matter behind us," Wells Fargo spokesperson Tom Goyda said.
"We took appropriate corrective action against the team members involved, and have in place procedures to provide strong oversight and monitoring of both the closing agent selection process and our team members' roles in that process,” Goyda added.