The Consumer Financial Protection Bureau slapped Freedom Mortgage with a $1.75 million fine Thursday for allegedly violating the
Specifically, the watchdog claims the mortgage shop was providing illegal incentives to real estate brokers and agents, such as cash payments, paid subscription services, and catered parties, with the understanding purchase business would be sent its way in return.
Another party hit by a civil penalty in connection to this case is Realty Connect USA, which allegedly accepted numerous illegal kickbacks from Freedom. The real estate brokerage firm will have to pay a $200,000 penalty and cease its unlawful conduct, the CFPB said.
"Freedom provided kickbacks to real estate brokers and agents — including those at Realty Connect — in return for mortgage referrals, a clear violation of federal law," said CFPB Director Rohit Chopra in a press release. "The CFPB will be vigilant in rooting out anti-competitive behavior that interferes with consumers' ability to choose financial products and services."
Freedom Mortgage and Realty Connect USA did not immediately respond to a request for comment.
The mortgage company entered into numerous marketing services agreements with over 40 real estate brokerages, including Realty Connect, and was paying $90,000 out of pocket for said services. However, the watchdog alleges these agreements were a cover for the mortgage shop actually using this as a way to pay for mortgage referrals.
Specifically, the CFPB points out that Realty Connect cashed in $6,000 per month from Freedom, but did not perform many of the marketing tasks expected.
Additionally, the bureau alleges the mortgage company handed out valuable industry subscription services to over 2,000 agents, including those who worked at Realty Connect, free of charge as a means to entice.
Since 2017, the real estate agents who received free access to said subscription services made more than 1,000 mortgage referrals to Freedom.
Last but not least, the mortgage lender entertained brokers and agents, including throwing exclusive events for Realty Connect employees, CFPB's consent order reads. Freedom paid for "food, beverages, alcohol, and entertainment" and gave away "free tickets to sporting events, charity galas, or other events where the agents and brokers would have otherwise needed to pay their own way."
The bureau is ordering for Freedom to immediately cease these illegal activities.
Though RESPA violations haven't been the main focus of the CFPB in recent years, some attorneys have pointed to the bureau publishing an advisory opinion on
