CFPB Accuses Title Settlement Firm of Illegal Kickbacks

October 25, 2013
American Banker  
mortgage lending news

The Consumer Financial Protection Bureau (CFPB) is taking action against Louisville, Ky.-based law firm Borders & Borders PLC, alleging that it received illegal kickbacks from certain charges on real estate settlements. The firm and its three principals allegedly created a network of shell companies to profit from kickbacks through real estate settlement referrals.

Borders & Borders is said to have entered into nine joint ventures with local real estate and mortgage broker companies to act as title insurance agents, when the referral business actually provided kickbacks to the law firm and its ventures. The firm's principals are also being charged with violating the Real Estate Settlement Procedures Act, which bans kickbacks for referrals for mortgage settlement services.

"When companies pay kickbacks in exchange for referrals, it can hurt competition and inflate real estate settlement costs for consumers, while creating an uneven playing field that puts law-abiding businesses at a disadvantage," the CFPB said in a news release. The agency is asking the court to block the firm and its principals from engaging in such practices and is also seeking repayment for those harmed as well as additional relief.

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