The Consumer Financial Protection Bureau (CFPB) announced it is charging Parsippany, New Jersey-based Stonebridge Title Services Inc., with violating the Real Estate Settlement Procedures Act (RESPA) by offering kickbacks for business referrals.
In a consent order released Thursday, the CFPB ordered Stonebridge to pay a civil penalty of $30,000.
"Kickbacks drive up the costs of getting a mortgage and put law-abiding companies at a disadvantage," said CFPB Director Richard Cordray with the release of the consent order.
After being tipped off by the Department of Housing and Urban Development, the CFPB investigated Stonebridge's business practices and found it violated RESPA by paying commissions to third parties in exchange for title business referrals.
RESPA permits commissions for business referrals only if the referrer is an employee of the company. However, the CFPB determined Stonebridge was offering commissions to independent contractors who were "not bona fide employees," according to the CFPB.
According to the consent order, "Beginning in at least 2008 and continuing until at least 2013, Stonebridge paid referral commissions of up to 40% of the title insurance premiums they received from consumers to Independent Salespeople for the referral of title insurance work to Stonebridge."
The independent salespeople did receive W-2 tax forms for their income through Stonebridge, but the CFPB determined Stonebridge's actions were still illegal because the individuals were not company employees.
"The Consumer Bureau will continue to take action against companies that seek to attract consumers through illegal schemes," Cordray said Thursday.