On May 26, 2016, the Consumer Financial Protection Bureau (CFPB) filed an administrative consent order against a former Wells Fargo employee arising from violations of the Real Estate Settlement Procedures Act (RESPA). The individual, a loan officer, was alleged to have engaged in an illegal fee-shifting scheme whereby he was able to manipulate certain closing fees and costs for certain customers at the expense of other customers. The consent order states that the individual referred closings to a specified escrow company which, in turn, would reduce or waive costs for certain customers and recover the same by increases in costs to other customers. The CFPB found that the scheme resulted in increased commissions to the individual and that his actions violated RESPA's prohibition against giving a "fee, kickback, or thing of value" in exchange for business referrals. As such, the individual was fined $85,000 and has been banned form working in the mortgage industry for a period of one year.
The CFPB has broad regulatory and administrative powers. Although it typically focuses on larger financial institutions and service providers within the consumer financial field, this consent order stands as a reminder that individuals are also subject to oversight by the CFPB.
A copy of the consent order is available at the CFPB website, here.
