CFPB Sues Real Estate Law Firm For RESPA Violations

Posted by Patrick Barnard on October 25, 2013 No Comments
Categories : Residential Mortgage

14532_gavel2 CFPB Sues Real Estate Law Firm For RESPA Violations The Consumer Financial Protection Bureau (CFPB) is suing Louisville, Ky.-based real estate law firm Borders & Borders for allegedly paying illegal kickbacks for real estate settlement referrals through a network of shell companies – a violation of the Real Estate Settlement Procedures Act (RESPA).

The bureau alleges the firm operated nine joint ventures with the owners and managers of local real estate and mortgage broker companies and that it used the joint ownership to disguise illegal kickbacks as legitimate profit sharing. After a firm in one of the joint ventures referred its client to Borders & Borders, the profits were shared by all entities in the joint venture, according to the CFPB.

As per the complaint, the nine joint ventures were not bona fide entities and did not have their own office space, email addresses or phone numbers. What's more, all nine shared a single independent contractor who was also an employee of Borders & Borders.

‘Today's action sends a clear message that companies cannot design business structures to hide illegal kickbacks,’ Richard Cordray, director of the CFPB, says in a release. ‘The CFPB will continue to pursue companies that seek to profit from convoluted arrangements that limit competition and hurt honest businesses.’

The matter was referred to the CFPB by the U.S. Department of Housing and Urban Development.

To view a copy of the complaint, click here.

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