By Alan Zibel
WASHINGTON-- Wells Fargo & Co. on Thursday agreed to pay
$34.8 million to settle allegations it received payments from a
title firm in exchange for business, as a U.S. regulator
scrutinizes such relationships in the real-estate industry.
As part of the same action, J.P. Morgan Chase & Co. agreed
to pay $900,000. The banks settled civil claims brought by the
Consumer Financial Protection Bureau and the Maryland attorney
general's office.
Under the settlement, filed in federal court for approval, Wells
Fargo agreed to pay a $24 million fine as well as $10.8 million in
compensation to consumers. J.P. Morgan agreed to pay a $600,000
fine and $300,000 to consumers.
The case underscores a CFPB effort to scour the real-estate
industry for payments tied to business referrals, which are illegal
under federal law.
The joint settlement with J.P. Morgan and Wells is the largest
case to date brought by the CFPB over the issue.
The CFPB said loan officers at both banks participated in a
scheme with a now-defunct Owings Mills, Md.-based title company,
Genuine Title LLC.
Under the arrangement, officials said, the title firm from 2009
to 2013 provided cash payments and referrals of potential mortgage
customers in exchange for title services.
Genuine Title bought data on consumers who were likely to
refinance their loans and provided them to loan officers at Wells
and J.P. Morgan, according to a court document. More than 100 loan
officers from at least 18 Wells Fargo branches participated, as did
six Chase loan officers, the CFPB said.
"These banks allowed their loan officers to focus on their own
illegal financial gain rather than on treating consumers fairly,"
CFPB Director Richard Cordray said in a written statement.
In settlement documents, the banks didn't admit or deny the
allegations. Spokesmen for both lenders said they fired loan
officers tied to the arrangements.
"We are fully committed to ensuring that our mortgage bankers
comply with all legal and regulatory requirements," a J.P. Morgan
spokesman said in a written statement. "These former employees
clearly violated our policies, procedures and training."
A Wells Fargo spokesman said the bank "fully cooperated with the
CFPB in this matter and have taken strong corrective action,
including terminating team members who were involved and enhancing
our procedures to provide greater oversight and monitoring of both
the process and our team members."
An unidentified lender participated in the scheme and reported
its behavior to the regulator, the CFPB said. The regulator said it
completed its investigation of that company with no enforcement
action due to the institution's cooperative behavior.
Write to Alan Zibel at alan.zibel@wsj.com
Corrections & Amplifications
Under the settlement, Wells Fargo agreed to pay $10.8 million in
compensation to consumers. A previous version of this story
incorrectly said that figure was $11.1 million. (Jan. 22, 2015)
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