HomeStreet Bank has agreed to pay a $.135 million penalty to settle accusations that it paid kickbacks to real estate agents and homebuilders in violation of the Real Estate Settlement Procedures Act (RESPA).
RESPA prohibits “giving or accepting a thing of value for the referral of settlement service involving a federally related mortgage loan,” according to the Federal Deposit Insurance Corporation, which announced the settlement.
The FDIC said that HomeStreet Bank, through its now-defunct Home Loan Center-based business line, entered into co-marketing arrangements in which HomeStreet and real estate brokers agreed to market their services together through online platforms. The FDIC’s investigation also found that HomeStreet entered into “desk rental” agreements in which it rented space in the offices of real estate brokers and homebuilders.
The upshot of these arrangements was allegedly the payment of fees by HomeStreet to real estate brokers and homebuilders for their referrals of mortgage business.
“While co-marketing arrangements and desk rental agreements are permissible where the fees paid bear a reasonable relationship to the fair market value of marketing or rental costs, such arrangements violate RESPA when the amounts paid exceed the fair market value and the excess is for referrals of mortgage business,” the FDIC said.
HomeStreet agreed to pay the penalty, but did not admit or deny that it had violated RESPA.
HomeStreet retreated from the mortgage market this year, citing “persistent challenges” in the industry.