HomeStreet Bank to pay $1.35 million penalty under settlement with FDIC over RESPA violations

HomeStreet Bank of Seattle, Wash., will pay a $1.35 million civil money penalty under a consent order with the Federal Deposit Insurance Corp. (FDIC) related to alleged violations of the Real Estate Settlement Procedures Act (RESPA), the agency announced Wednesday.

Section 8(a) of RESPA prohibits giving or accepting a thing of value for the referral of settlement service involving a federally related mortgage loan. The FDIC determined that HomeStreet Bank, through its now discontinued Home Loan Center-based mortgage banking business line, entered into certain co-marketing arrangements in which the bank and real estate brokers agreed to market their services together using online platforms; and that the bank entered into desk rental agreements, with the bank renting 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 said. “HomeStreet Bank has terminated all of the co-marketing and desk rental agreements.”

The agency noted that while co-marketing arrangements and desk rental agreements are permissible where the fees paid bear a reasonable relationship to the fair market value of marketing or rental costs, such arrangements and agreements violate RESPA when the amounts paid exceed fair market value and the excess is for referrals of mortgage business.

The FDIC did not state, and the consent order (just over two pages long) does not show, how much in fees the bank paid in connection with its arrangements with real estate brokers and home builders.

The agency said HomeStreet Bank agreed to the issuance of the order without admitting or denying the above-noted violations.

FDIC Announces Settlement with HomeStreet Bank in Seattle for Violations of the Real Estate Settlement Procedures Act

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