Illegal incentives in exchange for mortgage loan referrals earns cease and desist, $1.75 million penalty

Providing illegal incentives to real estate brokers and agents in exchange for mortgage loan referrals has earned a Florida non-bank company a $1.75 million penalty and a cease and desist order, the federal consumer financial protection agency said Thursday.

The Consumer Financial Protection Bureau (CFPB) said Freedom Mortgage Corp. of Boca Raton, Fla., provided real estate agents and brokers with numerous incentives — including cash payments, paid subscription services, and catered parties — with the understanding the agents would refer prospective homebuyers to Freedom for mortgage loans.

“This conduct violated the Real Estate Settlement Procedures Act (RESPA) and its implementing regulation,” the agency said in a release.

The agency said it is ordering Freedom to cease its illegal activities and pay $1.75 million into the CFPB victim relief fund.

Separately, the agency said, CFPB issued an order against a real estate brokerage firm, Realty Connect USA Long Island (Realty Connect), for accepting numerous illegal kickbacks from Freedom. Realty Connect will pay a $200,000 penalty and cease its unlawful conduct.

CFPB asserted that Freedom is a privately held nonbank mortgage loan originator and servicer. In August 2021, Freedom transferred its traditional retail mortgage unit to its wholly owned subsidiary, RoundPoint Mortgage Servicing (RoundPoint). Freedom’s RoundPoint subsidiary ceased traditional retail operations on or around August 2022. Realty Connect is a privately held real estate brokerage firm based in Suffolk County, New York.

According to the agency, Freedom and Realty Connect violated RESPA in several ways, including:

• Paying for referrals through illegal marketing service arrangements;
• Offering premium subscription services free of charge;
• Hosting and subsidizing company events and providing gifts.

CFPB Penalizes Freedom Mortgage and Realty Connect for Illegal Kickbacks