Federal regulators are slapping a California-based lender with a $3.5 million dollar fine for what they call an illegal kickback scheme. They also ordered two brokers and a mortgage servicing company to pay almost a half million dollars in fines for accepting those kickbacks in exchange for illegal referrals.
The Consumer Financial Protection Bureau says Prospect Mortgage used a variety of methods to pay brokers for referrals from 2011 through 2016. It appears the primary method involved Marketing Service Agreements.
Those are supposed to be used to pay for advertising or promotional services. But, the CFPB says the MSAs were used to hide customer referral payments. It says Prospect would track the number of referrals by an individual broker and then adjust the amount of money it would pay that broker for marketing services. A Keller Williams broker out of Corvallis, Oregon was fined $180,000 for accepting these kinds of payments.