The Consumer Financial Protection Bureau (CFPB) and the Maryland Attorney General have taken action against two executives of a Maryland-based title company as well as four loan officers for their alleged involvement in a ‘pay to play’ kickback scheme.
The announcement follows enforcement actions in January against Wells Fargo and JPMorgan Chase for their role in the scheme.
According to the CFPB, Maryland-based Genuine Title offered real estate closing services from 2005 until it went out of business in April 2014. The company was founded and owned by Jay Zukerberg, while Brandon Glickstein served as the company's director of marketing.
The CFPB alleges that the pair engaged in a scheme with four loan officers wherein cash and marketing services were traded in exchange for mortgage referrals.
The four loan officers named in the complaint are Gary Klopp, Adam Mandelberg, William Peterson and Angela Pobletts. Klopp, Mandelberg and Pobletts were loan officers working in the greater Baltimore area, while Peterson was a loan officer and the president of a Maryland-based mortgage brokerage.
The CFPB says the defendants traded cash and marketing services in exchange for mortgage referrals.
Authorities allege that Zukerberg and Glickstein developed and operated schemes to give loan officers marketing services and cash payments in exchange for referrals of mortgage business – a violation of the Real Estate Settlement Procedures Act.
Specifically, authorities allege that Genuine Title offered services, including purchasing, analyzing and providing data on consumers, and creating letters with the loan officers' contact information that the company printed, folded, stuffed into envelopes and mailed. In return, the loan officers would refer homebuyers to the company for closing services.
Authorities allege the loan officers benefited from the scheme because the marketing services increased the amount of business they generated.
Authorities say Zukerberg knew that it would raise suspicions if Genuine Title paid cash directly to the loan officers, so the four loan officers set up shell companies to make it look as though the payments were legitimate.
Authorities allege that from 2009 to 2013, Zukerberg and Glickstein arranged for cash payments to the loan officers in amounts ranging from $130,000 to $500,000.
Providing the CFPB and AG's consent order is accepted by the court, Zukerberg would be required to pay $130,000 in redress and penalties and would be banned from the mortgage industry for five years.
Glickstein would be required to pay $400,000 in redress and would be banned from the mortgage industry for five years.
Mandelberg would be required to pay $30,000 in redress and would be banned from the mortgage industry for two years.
Peterson would be required to pay $65,000 in redress and would be banned from the mortgage industry for two years.
Pobletts would be required to pay $37,500 in redress and would be banned from the mortgage industry for two years.
Klopp still faces action.
The CFPB will determine whether any consumers are eligible for relief.