Consumer bureau drops $109M fine against NJ lender accused of kickback scheme

The Trump administration dropped regulatory action against a New Jersey mortgage lender on Thursday, concluding a four-year dispute between the company and the Consumer Financial Protection Bureau (CFPB).

PHH Corporation, a company based in Mount Laurel, N.J., was accused in 2014 by the agency of running a 15-year kickback scheme, collecting millions in illegal payments for referring business to insurance companies, NJ.com reports.

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AmericanBanker.com reported Thursday that acting CFPB chief Mick Mulvaney dismissed the case, writing in a two-paragraph legal filing that the firm did not violate the Real Estate Settlement Procedures Act, a law banning kickbacks for referrals.

“PHH did not violate RESPA if it charged no more than the reasonable market value for the reinsurance it required the mortgage insurers to purchase, even if the reinsurance was a quid pro quo for referrals,” Mulvaney wrote in the legal filing.

The CFPB, under former director Richard Cordray, overruled a judge’s lower penalty for the lender and ordered the company to pay $109 million in penalties. PHH then sued the agency, and a judge dismissed that fine in January.

A spokesman from the CFPB blasted the former director’s “questionable” legal tactics in a statement following the decision.

“This dismissal just ends this embarrassing chapter that was premised on then-Director [Richard] Cordray’s questionable legal theories, which never should have been pursued, and that the D.C. Circuit rightly rejected in January,” John Czwartacki told the New Jersey Law Journal.

PHH praised the decision in a statement to NJ.com.

“We are extremely gratified to have this matter fully resolved as a result of Acting Director Mulvaney’s decision to dismiss this case,” PHH said. “Today’s Order is consistent with our long-held view that we complied with RESPA and other laws applicable to our former mortgage reinsurance activities in all respects.”