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Lender Hit With Consent Order for Illegal Kickbacks

Violations of RESPA alleged

Jan. 16, 2014

By Mortgage Daily staff

A mortgage lender out of Missouri has been hit with a consent order over illegal kickbacks paid to a bank for referrals.

The bank that was allegedly receiving the illegal kickback was Bank of Sullivan in Sullivan, Mo., an announcement Thursday said.

In return for referring loans to the lender, the bank received compensation that was masked as inflated lease payments.

The payments violated the Real Estate Settlement Procedures Act.

The lender was Fidelity Mortgage Corp., which was created in 2012 by Bank of Sullivan to acquire Fidelity Financial Mortgage Corp. from Mark Figert.

Figert stayed on as president of Fidelity after the sale and operated one of the lender offices in the St. Louis area.

It was Figert's idea to tie the lease payment amounts to the loan volume, according to the news release from the Consumer Financial Protection Bureau.

"The parties discussed 'anticipated loan volume' and a 'pipeline' of referrals," the CFPB said. "They negotiated a daily rental rate of $200, as well as an exclusivity clause requiring the bank
to promote only FFMC and vice-versa. Thus, the parties had an exclusive quid pro quo relationship-the bank referred to FFMC customers who wanted residential mortgages, while FFMC referred to the bank customers who wanted traditional banking services."

Around 20 loans were originated under the arrangement from March 2012 until November 2012, and $27,076 in originations fees were collected.

Fidelity paid the bank between $800 and $2000 for monthly rent even though typical rents for the are were between $600 and $900 a month.

Fidelity and Figert agreed to a consent order requiring them to pay back all of the origination fees plus a $54,000 civil penalty.

"Kickbacks harm consumers by hampering fair market competition and by unnecessarily increasing the costs of getting a mortgage," CFPB Director Richard Cordray said in the announcement. "The Consumer Financial Protection Bureau will continue to take action against schemes that steer consumers to lenders through unscrupulous and illegal business practices."

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