WBK Industry News - Federal Regulatory Developments

FDIC Consent Order for Repeat RESPA §8 Violations

The FDIC recently announced a Consent Order with a bank in Oregon, imposing a $425,000 civil money penalty for violations of Section 8(a) of RESPA, Section 5 of the FTC Act, and Section 604(f) of FCRA.  The FDIC determined that the bank violated Section 8(a) of RESPA “by entering into mortgage lead generation arrangements with the operator of a real estate website and the operator of an online loan marketplace that were used to facilitate and disguise referral payments for mortgage business.”  Further, the FDIC determined that the bank violated the FTC Act through deceptive and misleading representations related to three of the bank’s prescreened credit offerings.  Finally, the FDIC determined that the bank had violated FCRA by acquiring consumer reports of former loan clients (with recent credit inquiries) without a permissible purpose, in an apparent reference to a form of trigger leads.  The civil money penalties were assessed under 12 U.S.C. § 1818(i)(2), which is part of the FDIA.  As is customary for FDIC consent orders, the bank neither admitted nor denied the violations.

In 2019, the FDIC had imposed a $275,000 civil money penalty on the same bank for violating RESPA by agreeing to pay and accept fees for the referral of mortgage loan business.