Banking and Finance Law Daily HomeStreet Bank to pay $1.35M CMP to settle alleged RESPA violations
Thursday, November 7, 2019

HomeStreet Bank to pay $1.35M CMP to settle alleged RESPA violations

By Charles A. Menke, J.D.

The settlement resolves charges that the bank’s now discontinued mortgage banking business entered into comarketing agreements that resulted in the payment of fees to real estate brokers and home builders for their referrals of mortgage loan business.

The Federal Deposit Insurance Corporation has reached a settlement with HomeStreet Bank, Seattle, Wash., resolving charges that the bank violated the Real Estate Settlement Procedures Act and implementing Regulation X, the FDIC announced. Pursuant to an Order to Pay Civil Money Penalty, HomeStreet agreed to pay a civil money penalty of $1,350,000. HomeStreet agreed to the issuance of the order without admitting or denying the alleged violations.

Section 8(a) of RESPA prohibits giving or accepting a thing of value for the referral of a settlement service involving a federally related mortgage loan. According to the FDIC, HomeStreet, through its now discontinued Home Loan Center-based mortgage banking business line, entered into co-marketing arrangements in which the bank and real estate brokers agreed to market their services together using online platforms. The FDIC further determined that HomeStreet entered into desk rental agreements whereby the bank rented space in the offices of real estate brokers and home builders. These arrangements and agreements resulted in the payment of fees by the bank to real estate brokers and home builders for their referrals of mortgage loan business, in violation of RESPA.

The FDIC noted that while co-marketing arrangements and desk rental agreements are permissible when the fees paid bear a reasonable relationship to the fair market value of marketing or rental costs, these arrangements and agreements violate RESPA when the amounts paid exceed fair market value and the excess is for the referral of mortgage business. HomeStreet Bank has terminated all of the co-marketing and desk rental agreements, the FDIC said.

The order prohibits HomeStreet from seeking or accepting indemnification from any third party for the payment of the CMP. In addition, the order does not bar, estop, or otherwise prevent the FDIC or any other federal or state agency or department from taking any other action against HomeStreet or any of its current or former institution-affiliated parties.

Companies: HomeStreet Bank

MainStory: TopStory EnforcementActions Loans Mortgages RESPA WashingtonNews

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