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Major lender faces $3.5 million fine over massive kickback scheme

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Mortgage Professional America | 01 Feb 2017, 08:15 AM Agree 0
One of the country’s largest independent retail mortgage lenders has been hit with a multimillion-dollar fine for allegedly participating in kickback schemes with more than 100 real estate brokerages
  • | | 01 Feb 2017, 11:58 AM Agree 1
    I'm just curious when the real estate companies and their "in-house" lenders will ever get scrutinized
  • | | 01 Feb 2017, 12:04 PM Agree 0
    I'd like to know when they will do the same scrutiny with Construction companies. How can they require a Pre Approved buyer qualify with their preferred Lender?? No Steering there!
  • JD | | 01 Feb 2017, 12:06 PM Agree 1
    Agree. Baird and Warner agents get nasty emails form their "in-house" lender if their clients do not go through them first. The emails typically say things like "why did we not get to look at this deal?"

    Baird and Warner agents get awards for using their in-house lender and the office managers push the agents to only refer Key Mortgage - their in-house lender

    @Properties and Dreamtown has been getting paid by Guaranteed Rate for years!
  • | | 01 Feb 2017, 12:08 PM Agree 0
    Toll Brothers at their condo developments tells customers that the buildings are non-warrantable (they are not) because it is new construction so they have to use their lender.
  • | | 01 Feb 2017, 12:13 PM Agree 0
    MSA's should simply be outlawed - PERIOD. It is nothing more than a disguise for illegal kickbacks. Every Real Estate office in Arizona has their "preferred lender" in place and their rates and fees are ridiculously high....obviously to pay for the MSA. This arrangement does not benefit the consumer in any way and only lines the pockets of the companies who participate.
  • What a Joke | | 01 Feb 2017, 12:14 PM Agree 0
    CFPB didn't hold all parties it is the Realtors and Builders driving to in house and preferred. All they got was a slap on the hand. I agree that MSA's need to go But so does the CFPB
  • | | 01 Feb 2017, 12:26 PM Agree 1
    will someone find out what happens to the money! the offended sure do not get it paid back to them. It goes into Chorroys kitty to f with other american business. It should be shut down by the Trump team immedidaityl
  • | | 01 Feb 2017, 12:55 PM Agree 1
    so, 3.5 million divided by the 100 offices works out to $35,000 per office. You know they made much much much more than that per office being the "preferred lender" This only makes good business sense. It is a cost of doing business because the fines are so minimal. If some said, Hey, Brett i have got a deal that will make us 15 million plus, but if we get caught we have to get 3.5 of it back" who wouldn't do it. No matter what happens they alway come out ahead.
  • Frustrated | | 01 Feb 2017, 01:18 PM Agree 0
    Ever wonder why the realtors you work with insist they have to give three referrals to their clients to avoid steering, and then other realtors practically force your prequalified client to talk to "their lender"? Or why you can do consistently fantastic work and realtors won't give you the time of day after the transaction is done? Same reason you can't get on the builders "preferred lender list". The answer is $$$$$. And we see it again in this article where the lender pays the hefty fine and the realtors get slapped on the wrist when they knowingly steered clients for a kickback. A RESPA violation should be a harsh penalty on ALL parties. We don't do any MSA's and won't pay anything to anyone for referrals...and we're slowly being forced out of business. Thanks CFPB!
  • GladlyRetiring | | 01 Feb 2017, 03:59 PM Agree 0
    One of the Best Things CFPB has done yet. Large and Small Realtors are the same. In House, Marketing, Joint Venture our just under the table and in the pocket.
    Once asked a homebuyer class who the Realtor works for: The Answers were:
    1) Their Broker
    2) The Seller
    3) The Buyer if Buyer Agent
    4) Themselves (correct)
    I would never pay to play. Why, there is always someone else who will pay more. To quote EF Hutton, earn your business, do not buy it.
    I know to different LO's that paid the local ReMax Agent to pay. Both of them eventually got called in and were told. "It is not you, the agents love you....It all about the Money$
  • | | 01 Feb 2017, 04:01 PM Agree 0
    If I was a regulator fishing for violations I definitely would start with these construction companies who steer buyers to their preferred lender. It blows my mind that the CFPB hasn’t been all up in their business yet, this includes in house lenders at real estate companies. Talking about the consumers having to pay more than they must. Very sad.
  • Sam | | 01 Feb 2017, 04:56 PM Agree 1
    I've gotta ask: Why so light on the Realty company? Those commissions are certainly higher than what the LO's make!
  • MortgagePro | | 01 Feb 2017, 08:59 PM Agree 0
    Movement Mortgage anyone? They have so many "MSA's" it's crazy. I hear Casey is good buddies with the right folks so that company never gets looked at. They are WAY worse than Prospect.
  • friend of Chris Louis | | 02 Feb 2017, 12:07 AM Agree 0
    Yup---Must be a friend of yours, scumbags do stick together... Look forward to seeing you soooooon !!!!!
  • Confused | | 02 Feb 2017, 12:36 AM Agree 0
    Why is no one looking at new home builders with lender affilliates and preferred lender relationships? Same issues - builders are paid on both sides resulting in higher costs to consumers and they almost force buyers to use them or they have to pay even more!
  • Novoda Grace | | 02 Feb 2017, 02:19 AM
    Deleted by moderator
  • :) | | 02 Feb 2017, 11:00 AM Agree 0
    Add D'Aprile to that list. Also, don't forget up Pulte :)
  • :) | | 02 Feb 2017, 11:02 AM Agree 0
    I've looked into MM. They only rent office space (it is done by 'fair market rent' for the amount of square footage). This seems on the up & up
  • info | | 03 Feb 2017, 08:32 AM Agree 1
    deja vu, huh? Only $3.1 million last time in 2011:

    "HUD claimed Prospect operated as a 'series limited liability company,' a business structure unauthorized by FHA, and that Prospect used this business structure to create hundreds of sham joint ventures with real estate brokers, mortgage brokers, mortgage lenders, servicers and other settlement service providers and to share profits for the referral of real estate settlement services."

    https://portal.hud.gov/hudportal/HUD?src=/press/press_releases_media_advisories/2011/HUDNo.11-146
  • ohio_mortgage_genius | | 03 Feb 2017, 04:05 PM Agree 1
    Real estate brokers & realtors who are caught doing this should lose their license. Period. There is only ONE reason why any lender would pay cash for referrals AKA marketing agreements, and that's because if they don't, then someone else will. IF the realtor community would police itself, which it doesn't, then things like Marketing Agreements, and 'preferred' or 'in house' lenders wouldn't exist. I work with hundreds of home buyers each year, and when following up with past pre-approved home buyers I regularly hear "I went with the lender that my realtor preferred".. not "referred".. "PREFERRED".. The real estate agents push lenders, title companies, movers, insurance agents, building communities, etc etc AND get kick backs from ALL of them. This isn't to say that ALL real estate agents do this, but many.. MANY do.
  • blm_not rly tho | | 03 Feb 2017, 04:13 PM Agree 0
    OH.. and I especially find it odd when an entire real estate "TEAM" or "OFFICE" does 100% of their business in one city or town, say Northeast Columbus, OH, but their "Preferred" lender is in a completely different state (Pennsylvania.. ), or a 2 hour drive completely out of the city(Mason, OH.. ). Kind of odd, wouldn't you say?
  • GOODDOT | | 03 Feb 2017, 06:01 PM Agree 1
    It should just be plain illegal for any Mortgage Company, Bank, Credit Union, or other lending entity to give anything to a real estate company, builder, or any other referral source. Not even for advertising. If you want to advertise do it on your own. If you advertise in a trade publication, you better have a percentage of the page cost break down and proof you paid it. The only way to get leads is to do an excellent job. Plain and simple. Also when this starts going on, it is impossible to represent the lender and consumer properly by making sure the terms of the agreement are adhered to, including no short cuts on agreed upon repairs in order to expedite a transaction. It is up to the Mortgage Person to keep the game honest, because agents will not, in most cases. Builders, another story, should not be allowed to be in the same room with a lender as they want to control the transaction. No one should be forced to be pre approved with anyone other than who they want to work with. Banks who make construction mortgages should not be allowed right of first refusal. Builders and Real Estate Companies should not own mortgage companies, real estate companies, appraisal companies, title companies. If they do, then they should not be allowed to finance the clients from their other entities. The trouble is CFPB, Hud, Respa, and all the regulatory agencies come out with rules and then leaves the door wide open by terrible exceptions that encourage the dishonest people to take advantage of non specific clarity. Make the rule crystal clear. I have seen this stuff for 30 years...and 4 recessions ago.
  • Brad | | 18 Feb 2017, 03:19 PM Agree 0
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