Magazine article American Banker

CFPB Accuses Title Settlement Firm of Illegal Kickbacks

Magazine article American Banker

CFPB Accuses Title Settlement Firm of Illegal Kickbacks

Article excerpt

Byline: Rachel Witkowski

WASHINGTON -- The Consumer Financial Protection Bureau is suing a Kentucky law firm on allegations that it received illegal kickbacks from certain charges on real estate settlements.

The charges announced by the CFPB Thursday accuse Borders & Borders PLC in Louisville and its three principals of forming a network of shell companies to profit from kickbacks through real estate settlement referrals. The case was filed in the U.S. District Court for the Western District of Kentucky.

"Today's action sends a clear message that companies cannot design business structures to hide illegal kickbacks," said CFPB Director Richard Cordray, in the release. "The CFPB will continue to pursue companies that seek to profit from convoluted arrangements that limit competition and hurt honest businesses."

The CFPB said Borders & Borders entered into nine joint ventures with local real estate and mortgage broker companies to act like title insurance agents when in reality the referral business provided kickbacks to the law firm and ventures. The firm's three principals -- Harry Borders, John Borders Jr. and J. David Borders -- are also being charged for violating the Real Estate Settlement Procedures Act. The law bans kickbacks for referrals for performing settlement services on mortgages.

"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 the release. …

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