The Consumer Financial Protection Bureau (CFPB) is starting the new year with two significant crackdowns on lender practices, reported CNN Money.
In the first case, the CFPB fined CitiFinancial Servicing and CitiMortgage, both subsidiaries of Citibank, $28.8 million for giving homeowners the “runaround” by requesting unnecessary documents or other paperwork that borrowers had already provided.
In addition to refunding each customer $400 each, CitiMortgage was also ordered to halt any pending foreclosures that were involved in the subject application processes.
In another instance, the CFPB fined Prospect Mortgage $3.5 million for using illegal referral fees and kickbacks in exchange for mortgage origination fees.
The CFPB claimed some brokers would require prospective buyers to get pre-qualified with Prospect in order to submit an offer, even if the buyer was already pre-approved or was paying in cash. Prospect also allegedly offered cash to brokers for each lead they sent to the company. A lead consisted of a prospective buyer’s name, address, phone number and email address.
While it’s common for brokers to refer buyers for various home-buying services like an appraiser, lender or home inspector, federal law prohibits offering and accepting kickbacks or referral fees for services involved in a real estate transaction.