CFPB Sues Loan Officers, Execs in Mortgage Kickback Scheme

Following enforcement actions in January against Wells Fargo and JPMorgan Chase, the Consumer Financial Protection Bureau (CFPB) has taken action against several mortgage executives and loan offers for their role in a “pay-to-play” mortgage kickback scheme. 

The CFPB and the Maryland Attorney General have filed a complaint in federal court, alleging that a now-defunct title company’s executives and the named loan officers — some of whom have a background in reverse mortgage origination — traded cash and marketing services in exchange for mortgage referrals. 

Under proposed consent orders filed Wednesday, if entered by the court, five of the six individual defendants would be banned from the mortgage industry for two to five years and required to pay a total of $662,500 in redress and penalties. The action will proceed against the remaining defendant.

The agency’s announcement follows previous enforcement actions taken this year against Wells Fargo and JPMorgan Chase for their role in the scheme.

“Paying kickbacks for mortgage referrals is illegal, and it has been illegal for decades,” said CFPB Director Richard Cordray. “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.”

The CFPB and Maryland Attorney General’s complaint names Genuine Title, LLC; Jay Zukerberg; Brandon Glickstein; Gary Klopp; Adam Mandelberg; William Peterson; Angela Pobletts; and a number of limited-liability companies controlled by certain defendants.

Zukerberg was the founder and sole owner of Genuine Title, and Glickstein was the company’s director of marketing. Klopp, Mandelberg and Pobletts were loan officers working in the greater Baltimore area, while Peterson was a loan officer and the president of a Maryland-based mortgage brokerage.

According to the CFPB and Maryland, Zukerberg and Glickstein developed and operated schemes to give loan officers marketing services and cash payments in exchange for referrals of mortgage business. The kickback schemes violated the Real Estate Settlement Procedures Act (RESPA), which prohibits giving a “fee, kickback, or thing of value” in exchange for a referral of business related to a real estate settlement service. 

Specifically, the CFPB and Maryland allege that the defendants exchanged valuable marketing services for referrals and funneled illegal cash kickbacks through a network of companies.

Under the proposed consent orders, some consumers who obtained loans from the individual loan officers — or, in some cases, other loan officers they worked with — and paid fees for services where legal violations occurred would receive partial or complete refunds of those fees. The CFPB would determine who those consumers are, and would contact consumers who are eligible for relief.

Access the complaint here

Written by Emily Study

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