Fidelity Mortgage Corporation of St. Louis and its former owner and current president Mark Figert have been ordered by the Consumer Financial Protection Bureau to pay $81,076 for illegal kickbacks. The bureau alleges that Fidelity paid a local bank in exchange for mortgage referrals.
Fidelity, a non-depository mortgage lender, disguised the kickbacks as inflated rent payments for leasing office space within the unnamed Missouri bank, the CFPB said. An agreement between the two companies linked the amount of the monthly payments to the number of loans referred to Fidelity by the bank. Actual monthly payments ranged from $800 to $2,000, with an average of $1,350; comparable office space in the St. Louis area ranged from about $600 to $900 a month, the CFPB said.
Fidelity originated about 20 loans referred by the bank, earning $27,076 in fees between March and November 2012, according to the CFPB’s consent order.
Additionally, the two companies had what the CFPB called a quid pro quo arrangement, with the bank referring mortgage-seeking customers only to Fidelity, and Fidelity referring people seeking non-mortgage services only to the bank.
The CFPB alleges that Fidelity’s inflated rental payments constitute a violation of the Real Estate Settlement Procedures Act, which prohibits giving kickbacks in exchange for a referral of business related to a real-estate-settlement service.
Under the terms of the bureau’s consent order, Fidelity and Figert must pay back the $27,076 in proceeds from the referrals, which will be deposited in the United States Treasury. They must also pay a $54,000 civil penalty to the CFPB.
“Kickbacks harm consumers by hampering fair market competition and by unnecessarily increasing the costs of getting a mortgage,” CFPB Director Richard Cordray said. “The Consumer Financial Protection Bureau will continue to take action against schemes that steer consumers to lenders through unscrupulous and illegal business practices.”
In November, the CFPB also filed an enforcement action for illegal kickbacks against Republic Mortgage Insurance Corporation, proposing a $100,000 penalty. The bureau claimed that RMIC had given various lenders kickbacks by purchasing captive reinsurance in exchange for private mortgage insurance business referrals.