The CFPB continues to crack down on basic RESPA violations. On August 12, 2014, the CFPB announced yet another Consent Order with alleged violations of RESPA. In this case, an on-line retail mortgage company, the company’s CEO, and an affiliated management corporation agreed to pay $14.8 million in restitution to consumers. The CFPB also demanded $6 million in civil money penalties, $1.5 million of which is the personal responsibility of the company’s CEO. As forecasted in our earlier client alert, this Consent Order reaffirms the CFPB’s intent to enforce “common” RESPA violations, with an emphasis on basic compliance.

SIMPLE PROBLEMS, MAJOR CONSEQUENCES -

The Consent Order included claims against Amerisave Mortgage Company (Amerisave) under the Consumer Financial Protection Act for unfair and deceptive practices in connection with its advertising of mortgage rates and representation of appraisal fees. The CFPB also alleged that Amerisave improperly charged consumers fees prior to presenting consumers with Good Faith Estimates (GFEs). Under RESPA, lenders are prohibited from charging consumers any fees for appraisals, inspections, or other settlement services prior to providing the consumer with a GFE. Lenders are, however, permitted to charge consumers the actual cost of credit reporting fees prior to providing a GFE. In this case, the CFPB alleged that consumers were required to pay a $35 application fee, as well as an inflated credit report fee, prior to obtaining a GFE. Prior to providing the consumer with the GFE, Amerisave also required consumers to provide credit card authorization for the purpose of scheduling appraisals. The CFPB found that imposing these fees violated the plain language of RESPA. The CFPB emphasized that charging fees prior to providing the GFE makes consumers less likely to compare rates because they have already invested in closing the loan with the lender. Additionally, the CFPB reasoned that Amerisave was able to pad its profits by charging upfront fees to consumers who ended up not closing their loans with Amerisave.