Articles Posted in FDIC RESPA CONSENT ORDER

Marx Sterbcow, Managing Attorneyat Sterbcow Law Group, and Charles Cain, Of Counsel to Sterbcow Law Group and Senior Vice President to WFG National Title Insurance Company, will speak at the 2015 National Settlement Services Summit“NS3” Conference in Atlanta, Georgia on June 9, 2015. The presentation “Who’s Your Vendor? Vendor Management for Title Agents” will provide in-depth analysis and guidance on how title agents can understand and monitor the risks associated with their vendor relationships. We will discuss third party vendor management expectations originating not just from the OCC/FFIEC/FDIC/CFPB but from the secondary market on closing and settlement providers.

The Consumer Financial Protection Bureau often provides subtle clues as to where they may be headed on the enforcement front and on November 6, 2013 they addressed the topic on their website about online Lead Generation and consumer safety involving payday loans. The topic “Is applying for a payday loan online safe?

The CFPB stated that anytime a consumer gives out sensitive personal and financial information on the Internet there are risks involved to the consumer. They warned consumers that if a consumer applies online for a payday loan online, the consumer could be increasing their risk significantly. The CFPB stated the reason for this is because many websites that advertise payday loans are not lenders. They are businesses known as “lead generators” which make money primarily by finding customers for lenders.

The Bureau expressed concern that the online application or form that consumers filled out could be sold to a lender who offers to make the consumer a loan. The Bureau also indicated they have concerns as well that multiple lenders or other service providers could pay for this information causing the them to contact or email the consumer.

The Federal Deposit Insurance Corporation entered into a consent order with New Frontier Bank in St. Charles, Missouri on May 5, 2014 which was recently made public. (FDIC-14-0084b and FDIC-13-151k) The FDIC ordered New Frontier Bank to cease and desist from the violating the Real Estate Settlement Procedures Act “RESPA” Section 8, 12 U.S.C. §2607 and its implementing regulation, Regulation X, 12 C.F.R. §1024.14, which is the prohibition against kickbacks and unearned fees.

The FDIC’s consent order did not mention the facts surrounding this consent order only that “the Bank shall cease all acts or practices in violation of RESPA and take all necessary steps to effect and maintain future compliance with RESPA.”

The consent agreement also ordered New Frontier Bank to reimburse all consumers who were affected by the undisclosed RESPA violations to pay an amount not less than $400 per consumer as restitution for the RESPA violations the FDIC said New Frontier Bank may have violated. The consent agreement did not state how many consumers may have been impacted. In addition to the consumer restitution New Frontier Bank was ordered to pay a $70,000 dollar penalty to the Treasury of the United States.