Wells Fargo Bank and JPMorgan Chase Bank reached a settlement with Maryland Attorney General Brian Frosh on Thursday over allegations that they participated in a kickback scheme with Genuine Title, LLC.
The banks allegedly referred clients to the now-defunct Maryland title company from 2009 to 2013 in exchange for direct-mail marketing services and leads for its loan officers.
"Homeowners were steered toward this title company, not because they were the best or most affordable, but because they were providing kickbacks to loan officers who referred customers to them," Frosh said. "This type of quid pro quo is illegal, and it's unfair to other businesses that play by the rules."
As part of the settlement, Wells Fargo will reimburse $10.8 to customers who used Genuine Title to close loans between September 2011 and early 2014. The bank also will pay $21 million in penalties to the Consumer Financial Protection Bureau (CFBP) and $3 million to the Consumer Protection Division.
JPMorgan Chase will return $300,000 to clients, and pay another $500,000 in penalties to CFPB and $100,000 to the Consumer Protection Division.
"Today, we took action against two of the nation's largest banks, Wells Fargo and JPMorgan Chase, for illegal mortgage kickbacks," CFPB Director Richard Cordray said. "These banks allowed their loan officers to focus on their own illegal financial gain rather than treating consumers fairly. Our action today to address these practices should serve as a warning for all those in the mortgage market."