On April 29, the Consumer Financial Protection Bureau and the Maryland Attorney General’s Office jointly filed a Complaint in the U.S. District Court for the District of Maryland accusing a title service company and several mortgage loan officers of participating in an illegal kickback scheme whereby the company would funnel money and marketing services to the officers in return for mortgage settlement referrals.  The CFPB and Maryland AG’s Office claim that this scheme violated the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. §§ 2601-2617, which prohibits giving or accepting a “fee, kickback, or thing of value” in exchange for a business referral related to a real estate settlement service.  Such services include those that title service companies ordinarily provide, including title searches, title examinations, title certificate provision, and title insurance.

According to the Complaint, defendant Jay Zukerberg founded Genuine Title, a title-service company that offered real estate closing services for federally-related mortgages and refinance transactions.  Zukerberg and his fellow defendants allegedly developed and operated unlawful schemes to provide kickbacks that incentivized certain loan officers to close their mortgages with Genuine Title.  These kickbacks involved certain marketing services (such as forwarding coveted customer leads to the officers) and direct cash transfers laundered through limited-liability companies the officers created.  From 2009 to 2013, these cash payments allegedly ranged from approximately $130,000 to $500,000.

Under proposed consent orders filed with the court, five of the six individual defendants would be banned from the mortgage industry for a certain number of years and would pay $662,500 in redress and penalties. The suit would proceed against Gary Klopp, one of the loan officers and the sole remaining defendant.