February 2, 2017

The CFPB, (Consumer Financial Protection Bureau)  this week ordered Prospect Mortgage to pay a $3.5 million fine for improper mortgage referrals. The CFPB called it a kickback scheme.

There are three reasons why the mortgage company and two real estate brokers were fined:

  1. Prospect maintained various agreements with over 100 real estate brokers, including RE/MAX and Keller Williams franchisees, to deliver payments for referrals of mortgage business. The payments were based on the number of referrals and were disguised as co-marketing agreements.
  2. Prospect obtained additional referrals by having real estate brokers engage in a practice of including the company in their real estate listings. This practice required anyone seeking to purchase the property to obtain a pre-qualification with Prospect, even where consumers had already pre-qualified for a mortgage with a different lender.
  3. Prospect and Planet Home Lending had an agreement by which planet was compensated for referrals by taking a split of the proceeds on the sale of the loan.

RE/MAX Gold Coast was fined $50,000 in civil penalties and Keller Williams MID-Willamette was ordered to pay $145,000 in disgorgement, and $35,000 in penalties. Planet Home Lending will pay $265,000 in redress to consumers.

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