Mortgage Kickback Scheme Exposed: Top Lender Accused of Illegal Practices
The Consumer Financial Protection Bureau (CFPB) has accused Rocket Homes, a leading mortgage lender, and The Jason Mitchell Group of real estate brokerages of engaging in an illegal kickback scheme. This scheme allegedly steered mortgage applications back to Rocket, undermining fair competition and driving up housing costs.
A Web of Incentives
According to the CFPB, Rocket Homes offered referrals and inducements to real estate brokerages, encouraging them to direct settlement business to Rocket affiliates. One such incentive was the “dog bone” award, where agents received $250 gift cards for making the most referrals to favored partners, including Amrock and Rocket Mortgage.
Suppressing Competition
CFPB Director Rohit Chopra condemned the alleged scheme, stating that it discouraged homebuyers from comparison shopping and getting the best deal. “At a time when homeownership feels out of reach for many, companies should not illegally block competition, driving up housing costs,” Chopra emphasized.
Rocket Homes Pushes Back
Rocket Homes has rejected the CFPB’s allegations, calling the lawsuit “flimsy” and vowing to fight it. The company claims that data shows one-third of consumers with a loan application in progress with Rocket Mortgage chose to close with a different lender, demonstrating their commitment to empowering homebuyers.
A String of Enforcement Actions
Monday’s announcement marks the third major action by the CFPB since Friday, following lawsuits against Walmart, JPMorgan Chase, Bank of America, and Wells Fargo over alleged mishandling of fraud on peer-to-peer payments. This crackdown on illegal practices sends a strong message to companies operating in the consumer finance sector.
The Fallout
The Jason Mitchell Group has yet to respond to requests for comment. As the CFPB continues to investigate and take action against companies engaging in illegal practices, the industry is left to wonder who will be next. One thing is clear: the CFPB is committed to protecting consumers and promoting fair competition in the market.
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