The FDIC recently announced a consent order with an Oregon regional bank for violations of Section 8 of RESPA, the FTC Act, and the FRCA, resulting in a civil monetary penalty totaling $425,000. After conducting its investigation, the FDIC found:
- violations RESPA by entering into mortgage lead generation arrangement with a real estate website and an online loan marketplace to facilitate and disguise referral payments for its mortgage business;
- violations of the FTC Act through deceptive and misleading representations related to three of the bank’s prescreened credit offerings; and
- violations of FCRA by acquiring consumer reports of former loan clients (with recent credit inquiries) without a permissible purpose, in an apparent reference to a form of trigger leads.
This civil penalty represents the second such civil penalty on the same bank for similar RESPA violation based on a 2019 settlement with the FDIC.
Putting it Into Practice: This consent order illustrates regulators’ willingness to increase the amount of civil penalties for repeated violations for the same or similar conduct (see our previous posts regarding regulatory focus on repeat offenders here and here).
Companies should expect continued scrutiny around RESPA compliance after the CFPB’s February 7 Advisory Opinion clarifying that operators of online mortgage-comparison shopping platforms will be closely scrutinized for compliance with the prohibition on payments for referrals to mortgage lenders. In light of this recent guidance, operators should be aware of the following: (i) digital platform operators make a referral when they “non-neutrally” use or present information that steers a consumer to a settlement service provider or otherwise influences the consumer’s selection; (ii) referrals can be directed to consumers, as well as “appraisers, real estate agents, title companies and agents, lenders, mortgage brokers, or other companies that provide information in connection with settlements, such as credit reports and flood determinations;” and (iii) charging different fees to similarly situated service providers can constitute evidence an illegal referral fee.