The CFPB said that former Wells Fargo loan officer David Eghbali referred “a substantial number of loan closings” to one escrow company, which shifted its fees from some customers to others at his request. Eghbali was then able to manipulate loan costs, which had the ultimate effect of increasing the number of loans he closed and driving up his commissions, the CFPB said.
“We have taken action against an individual loan officer for illegal mortgage fee-shifting,” CFPB Director Richard Cordray said. “This should send a strong message that the law must be followed not only by large financial institutions, but also by the individuals who work for them.”
Eghbali served as a loan officer at a Wells Fargo branch in Beverly Hills, Calif. According to the CFPBm from at least November 2013 to February 2015, he had an arrangement with New Millennium Escrow that allowed him to manipulate the prices his customers would pay for escrow services.
New Millennium would allegedly – at Eghbali’s request – reduce its fees for some customers, making up the shortfall by jacking up fees on other customers. This allowed Eghbali – who referred almost all of his customers to New Millenium – to boost his business by offering “no-cost” loans.
According to the CFPB, the fee-shifting masterminded by Eghbali allowed him to increase the number of loans he closed and, consequently, the commissions he earned. He also received an award as a Wells Fargo top producer every year between 2011 and 2014, which meant he received a bonus on each loan closed.
The CFPB found that the scheme violated the Real Estate Settlement Procedures Act, which forbids giving a “fee, kickback, or thing of value” in exchange for a referral. Under the CFPB’s enforcement action, Eghbali must pay $85,000 to the agency’s Civil Penalty Fund. He has also been banned from the mortgage industry for one year.
The Consumer Financial Protection Agency has slaps a former Wells Fargo employee with an $85,000 fine for an illegal mortgage fee-shifting scheme.