On May 17, 2024, the Federal Deposit Insurance Corporation (FDIC) announced a settlement with an Arkansas bank and nine of its employees, resolving allegations that the bank and the employees violated Section 5 of the Federal Trade Commission Act (FTC Act), Section 8 of the Real Estate Settlement Procedures Act (RESPA), the Fair Credit Reporting Act (FCRA), and the Home Mortgage Disclosure Act (HMDA). Under the settlement, the bank stipulated to the issuance of an Order to Pay Civil Money Penalty in the amount of $1.5 million. The employees have stipulated to individual enforcement actions.
The FDIC alleged the bank violated Section 8 of RESPA by entering into certain co-marketing arrangements and marketing service agreements that resulted in the payment of fees by the bank to real estate brokers ad online/digital platforms for their referrals of mortgage loan business. Further, the FDIC claims the bank brokered reverse mortgage loans “where broker fees made to the bank constituted things of value provided in return for loan referrals in violation of RESPA Section 8.” The FDIC also alleged the bank violated Section 5 of the FTC Act by misrepresenting to consumers that they would be able to skip several payments when refinancing a Department of Veteran Affairs (VA) mortgage loan and misrepresenting its relationship with the VA. Finally, the FDIC alleged the bank violated disclosure laws. Specifically, the FDIC alleged the bank violated FCRA by failing to provide firm offers of credit and required disclosures to consumers and violated HMDA by failing to report accurate data on its 2021 loan application register.
In addition to the consent order with the bank, the FDIC entered into consent orders with nine of its employees resulting in agreements to pay Civil Money Penalties totaling $275,500. The consent orders between the FDIC and each of the nine employees can be downloaded here: Employee 1; Employee 2; Employee 3; Employee 4; Employee 5; Employee 6; Employee 7; Employee 8; and Employee 9.
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