Last week, the CFPB announced that it had filed a lawsuit against a Kentucky law firm and its principals, alleging that the defendants violated Section 8 of the Real Estate Settlement Procedures Act (RESPA) by creating a network of Affiliated Business Arrangements (ABAs) to pay illegal kickbacks for mortgage settlement referrals. The complaint was filed in a Kentucky federal court.
According to the complaint, the defendants used the ABAs to disguise illegal referral fees and kickbacks as profit sharing. In addition, the CFPB alleges that RESPA’s ABA exception is inapplicable because the defendants revised the language and “typography” of the ABA model disclosure.
For more information on the CFPB’s complaint, see our legal alert.