Consumer Financial Protection Bureau Director Richard Cordray denied an appeal by mortgage lender PHH Corp., concluding that the lender illegally referred customers to mortgage insurers in exchange for kickbacks. Cordray ordered PHH to pay $109 million to the CFPB for violating the Real Estate Settlement Procedures Act (RESPA).
Cordray held that PHH violated RESPA every time it accepted a kickback payment on or after July 21, 2008. The kickbacks took the form of mortgage reinsurance payments that mortgage insurers paid to a PHH subsidiary.
Cordray’s order requires the company to pay $109 million – all the reinsurance premiums it received on or after July 21, 2008. It also prohibits PHH from referring any consumer to a provider of a real estate settlement service if the provider has agreed to purchase any service from – or make any payment to – PHH, and if that purchase or payment is triggered by the referral.
PHH has the option to file an appeal in federal court within 30 days.
PHH is no stranger to legal woes. In July of last year, the company was ordered to pay $16 million to a California man in a mortgage modification fraud case. It has also been investigated by the U.S. Attorney’s Office for allegedly overcharging the government for foreclosure expenses on federally backed mortgages.
An embattled mortgage lender has been ordered to pay a $109 million penalty for orchestrating a massive mortgage insurance kickback scheme.