Wells Fargo, JPMorgan hit over kickback scheme
Wells Fargo (WFC) and JPMorgan Chase (JPM) have to pay a combined $35.7 million in penalties and consumer compensation for allegedly taking part in a kickback scheme with a title company, the Consumer Financial Protection Bureau said on Thursday.
The banks allegedly worked with the now-defunct Maryland company, Genuine Title, with bank loan officers accepting cash, marketing services and information on consumers in exchange for referring customers to the the title company.
Under the proposed resolution, Wells Fargo would pay $24 million in penalties and another $10.8 million in compensation to consumers whose loans were involved. JPMorgan Chase would pay $600,000 in penalties and $300,oo0 to consumers.
"Today we took action against two of the nation's largest banks, Wells Fargo and JPMorgan Chase, for illegal mortgage kickbacks," CFPB Director Richard Cordray said in a statement. "These banks allowed their loan officers to focus on their own illegal financial gain rather than on treating consumers fairly."
Genuine Title, which operated from 2005 through April 2014, acquired consumer data that it used to create mailings with the banks' logos. In exchange for the loan business it generated, the banks would point customers to Genuine.
"Homeowners were steered toward this title company, not because they were the best or most affordable, but because they were providing kickbacks to loan officers who referred consumers to them," Maryland Attorney General Brian Frosh said in a statement. "This type of quid pro quo arrangement is illegal, and it's unfair to other businesses that play by the rules."
More than 100 Wells Fargo loan officers participated in the scheme, the CFPB said. Most of them were based in Virginia or Maryland.
Federal authorities had warned Wells Fargo several times, the CFPB said, but it didn't halt the practice.
At least six JPMorgan Chase loan officers accepted marketing services from Genuine Title in exchange for steering customers, the CFPB said. It noted that the bank fired the loan officers who were involved, cooperated with the investigation and developed a remediation plan on its own.
