PHH Fights Back with CFPB

11/12/2015
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If you recall, PHH Mortgage had a $109MM issue with the CFPB.  Well, they appealed and won, but now the CFPB is pushing back.

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36 thoughts on “PHH Fights Back with CFPB”

  1. Kevin Beard says:

    Hi guys, it does say “should have never received”. I still agree with you though!!

  2. Tony Sampair says:

    Dudes remember only in America can a politician can advertise and recieve a $500/plate dinners…from constitiuents(which are typically all attended by people that want to buy favors….but us business people doing normal referral business can't even take our clients out for dinner for $50. Something is terribly wrong with this scenario…wouldn't you agree?

  3. Jonathan McKinnies says:

    Hey guys, the article actually said ‘payments they should have never received in the first place’.

  4. Guys, you need to read more carefully before you comment. The article you cited read just as it should have "PHH should NEVER have received in the first place".

  5. Betsy Hughes says:

    I love you guys and think you are great but I do have to correct you on a point for this post. The quote you showed on the screen from the CFPB stated "funds PHH should NEVER have received in the first place".

  6. Andrew Cady says:

    Missing a little word called “NEVER”. Nonetheless, it’s still a messed up deal.

  7. Melissa Case says:

    Another benefit of MSA, when loans start to go sideways due to Loan Officer neglect I can reach out to the relationship manager and get my clients loan back on track. Another benefit of MSA

  8. Mike Scalise says:

    As far as no one was hurt, we work in an area where our company will not do MSA's as we understand they are kick backs. They are horrible and are nothing but a kick back period and there are people hurt, they hutr the people trying to do things the right way. The MSA's with Realtors and Title companies absolutely cost consumers more money across the board. We have 3 main title companies in our area. 2 of the 3 have MSA's or ABA's with all the Real Estate companies and 1 title company has said they believe them to be illegal. That title company has the lowest fees in the area by about 35% then the other 2 and guess what… the other 2 title companies do abotu 90% of the business in our area because the Real Estate offices all use the ones they are making money from and when I say Real Estate offices I really just mean the owners of the Broker shops. You also mentioned that if an LO gives a Realtor $100 or a $1000 for a referral that closes you think that is wrong but if the owner of the Real Estate shop and the Owner of the Mortgage companies swap money through an MSA it is okay? How is that any different? You are paying for referrals and shutting out other lenders that play by the rules – not acceptable by any means in my book.

  9. Bill Jones says:

    Agree! Maybe and editing error? Report back so we can be clear on how the CFPB's responded.

  10. If there were no MSA then you would not need to reach out to the relationship manager. You would have a quality loan officer already on the deal who is not being paid below standards because you and everyone else is getting paid a kick back.

  11. Melissa Case says:

    Franklin Pattison I do, however sometimes it is not the loan officer. Sometimes it is the underwriter or processor. All I am saying it was a nice benefit when my Company had it. Now it does not.

  12. Guys, review your video starting at the 3:30 mark for comments 'should never have'. We'll forgive you. Enjoy the commentary.

  13. "Never" – arguement negated.

  14. Rusty says:

    Reading comprehension . . .

  15. Rusty says:

    Reading comprehension ain’t for everybody . . .

  16. Jim LaPointe says:

    PHH has been delivering kickbacks for many years probably to the tune of $109 mil. They knew what they were doing, not only did consumers get hurt but also the small business (mortgage broker) that never got a shot at the deal. All you guys can say is poor PHH. I hope the CFPB goes after any and everybody with these bogus MSAs. Even in today’s environment its worse than I have ever seen. Just about every Real Estate Company and every builder has an MSA with a Lender. I’m sorry, I mean kick back agreement.

  17. I have never seen a benefit to a borrower when they are forced to use the builders lender if they want their closing cost paid for. Always wind up paying a 1/4-1/2 more on rate. All MSA should be illegal.

  18. John Bacon says:

    According to a Wall Street Journal Article I just looked up to better understand what happened: "The CFPB alleges that PHH over 15 years collected up to 40% of premiums paid by consumers to mortgage insurers, a setup that resulted in "hundreds of millions of dollars in kickbacks." The company was aware the prices its borrowers were being charged for the insurance were higher than those of competitors, according to the regulator." If this is accurate then the consumer did lose because the mortgage insurance they paid was higher than normal because of this "steering" arangement. I'll be asking my lender partner to enlighten me about the morgage insurance process today.

  19. BMos says:

    My thoughts are you are missing the point of the purpose of the MSA. Do you think PHH or any of the other lenders in these agreements are reducing margins? They are not, thus the customer, who the CFPB is trying to protect is getting measurably higher rates and paying thousands of more dollars over the life of the loans “steered” to the lender by the MSA partner. And as PHH gets sliced and diced up and sold to the lowest bidder, let the others take notice. Fair Lending should be just that, not what ever benefits the bottom line most. With that said, the CFPB should be abolished, as it contradicts our entire doctrine in the USA. Freedoms are being chipped away slowly under the guise of making us safer?!?

  20. Steve Nimmer says:

    I have been an originator for 14 years (with PHH for 7 years). I have worked the mortgage industry from every angle (direct lender, broker, correspondent lender). The MSA situation is not/should not be automatically tagged with the "used car salesman" stigma. in fact, the absense of an MSA relationship doesnt guarantee any more of a legitate seasoned loan officer being referred into the transaction that the existence of an MSA. Real estate agents are able to (and going to) refer their clients to whomever has shown the abillity and willingness to handle their client the best as a smooth experience is what drives future customer referrals for the agent. I sometimes lose an MSA referred deal to builder's preferred in-house lender due to the builder's decision to pay more/all of the closing cost when using their preferred lender. It is situations such as those, where
    a buyer is being lead to a more financially favorable route that inhibits the buyers willingness to take an agents advice to use a seasoned professional with a solid history (it takes away "free" choice from the buyer). I dont mind any accusations where money received was not the byproduct of money earned, but for some of the idiots who comment by automatically assoicating an MSA with scrupulous referrals, thats where i draw the line.

  21. Steve Nimmer says:

    I have been an originator for 14 years (with PHH for 7 years). I have worked the mortgage industry from every angle (direct lender, broker, correspondent lender). The MSA situation is not/should not be automatically tagged with the "used car salesman" stigma. in fact, the absense of an MSA relationship doesnt guarantee any more of a legitate seasoned loan officer being referred into the transaction that the existence of an MSA. Real estate agents are able to (and going to) refer their clients to whomever has shown the abillity and willingness to handle their client the best as a smooth experience is what drives future customer referrals for the agent. I sometimes lose an MSA referred deal to builder's preferred in-house lender due to the builder's decision to pay more/all of the closing cost when using their preferred lender. It is situations such as those, where
    a buyer is being lead to a more financially favorable route that inhibits the buyers willingness to take an agents advice to use a seasoned professional with a solid history (it takes away "free" choice from the buyer). I dont mind any accusations where money received was not the byproduct of money earned, but for some of the idiots who comment by automatically assoicating an MSA with scrupulous referrals, thats where i draw the line.

  22. Greg Berg says:

    Sorry Brian and Frank, I totally disagree with your show today. I worked under an MSA, and we were consistently .25% higher in interest rate than the market rate. The owner of the company told me it was costing them millions for the MSA that was in place.

  23. If we all think that Government intervention in EVERYTHING is good….then I say "Welcome to Russia…or China". The Government in its quest to raise money (to pay the huge interest payments to China and Japan) will create an entity for just about anything to raise money. Granted, regulation is important, but remember the Government sanctioned and blessed the 2008 Fiasco by allowing banks to merge with Wall Street. They fell asleep on this (or didn't care) just like they did when they were looking into Bernie Madhoff…anyone remember this guy? The business of business is……BUSINESS……and our Government should protect where necessary, consult when asked and stay out of it when appropriate.

  24. Doug Hutchins says:

    When consumers are directed to a *single lender* as a result of that lender paying the RE broker a monthly MSA —- THATS A KICKBACK. More IMPORTANTLY – it eliminates the objectivity of the agent who would like to refer XYZ Lender based on great service and/or a special program specifically geared towards their buyers needs (such as a discounted product based on income or property location). The agents are pressured by the RE broker to use the favored lender. We ALL know this goes on constantly. This action by the CFPB is one of the good things to come out of the agency.

  25. Leslie says:

    It has been said a bazillion times (that is a “technical term”) that we do not need the CFPB. Well then, what group or agency is going to police apparent wrongdoing by Lenders which hurt Consumers? MSAs are kickbacks, plain and simple. Rates/terms are not as reasonable as they might be for Consumers when kickbacks, er, MSAs are involved. How does this benefit the Consumer, other than bundled services may be easier for them to acquire. A referral is just that, a referral, plain and simple. When I send someone to a Real Estate Agent, I do not ask for money, nor expect any OR to the retail side of a Lender when there are odd, extenuating circumstances. When you make a recommendation to a good restaurant, do you expect to be compensated for that referral?! Seriously. PHH knew exactly what they were doing, made LOTS-O-MONEY doing it and now the CFPB wants them to give some of it back.

    Black’s Law Dictionary defines disgorgement as “the act of giving up something (such as profits illegally obtained) on demand or by legal compulsion”. A court may order wrongdoers to pay back illegal profits, with interest, to prevent unjust enrichment. Disgorgement is a remedy and not a punishment.

    Just sayin’…

  26. Howard says:

    Would you feel comfortable if your surgeon paid the highest kickback of any other Doctors referring patients to him?…..no, I don’t think so. You would want to be referred knowing that there was absolutely NO financial reward whatsoever. Kickbacks make it all about the money, how naive to think otherwise. Any form of kick back should be strictly enforced including all MSAs. If Real Estate Brokers want to be in the mortgage business, let them open a company deal with all the things we have to deal with and compete like everyone else.

  27. Bill Balcer says:

    History….It's all about the money. Do some research. PHH was part of Cendant which turned into Realogy who owned Century 21, Coldwell Banker, ERA,Better Homes & Garden, Sutherbys real estate companies. PHH handled the financing and relocation. PHH and Cendant sold listing leads for money to Brokers outside of the Cendant real estate broker family to the highest bidders. After 25 years of dedication to Century 21 I did not renew our francise as did most brokers in the Greater Cleveland area. When the hard real estate times hit in 08 we were all innored and they raised our fees. They did funny things with our money. They charged us for TV advertizing and we got zip. Real estate Franchises are obsolete. Save your money. Our MLS's and NAR provides agents and brokers more than any franchise organization. If people want to buy a house and your office is out in the woods, in a cave and you have the listings, they will find you! So I don't feel sorry for PHH. They puched us to sell our customers their loans but in most cases the closing cost and interest rates where higher than we could find locally. Research Realgy on google. Checkout the involvement of the corporate raiders like Apollo and Icahn to didg out of the financial black hole. Not to big to fail.

  28. Sandy Ayala says:

    Funny, I have looked a few times and can't find an email to send the CFPB an email. I have a couple lender's that I work with on a regular basis because they take good care of my clients and I know that the deal will close for everyone's sake, but we don't give eachother money. Also, I will say that the statement you show, is that PHH should NEVER have received, so you are incorrect this time. Otherwise, keep up the good work.

  29. enough is enough
    STOP PLAYING THEIR GAME
    get back to being an independant broker.
    5000 little guys are never a target for government bureaucrats because they can't pay like the too big to fail guys can.

  30. Doug Juenke says:

    HI Frank,
    FYI!!! In your memo, it does say….and I quote, " should NEVER have received…." FYI. Thought you should know that is exactly what your onscreen memo says. just like the folks below are stating.

  31. Mike, last time I checked MSAs were not illegal if set up correctly. The money involved in an MSA should be flat rate that is assessed on the level of co-marketing done. It is not tied to how many deals are completed each month. There are attornies who specialize in putting these agreements together and coming up with an appropriate co-marketing fee.

    You're making a lot of ignorant assumptions that agents, lenders and title companies involved aren't playing by the rules and over charging the clients. That may be true in your market, but not in all. We have an MSA with a lender and recommend them to our clients because of the service and rates they provide. We also encourage them to shop around to ensure they're getting the best deal for their situation. More times than not, the client chooses the lender we have MSA with because of what they bring to the table. So how is that horrible?

    There's no requirement that our clients work with our preferred lender. They choose them based on our recommendation and what they bring to the table.

    Frank and Brian are spot on with their comments that MSAs can actually benefit the consumer when the lender, agent and title company work together to benefit the consumer.

  32. That type of MSA is illegal. However, there are many forms of MSAs that don't force the consumer to use a certain lender or title company that are completely legal. So no, all MSAs should not be illegal.

  33. Mike Scalise says:

    John if u think MSAs benefit anyone but the parties kicking money back and forth I believe you are either delusional or most likely have a few MSA's yourself. A kick back is a kick back period. If the owners swap money it is an MSA, but if an LO just gives money to a Realtor it is illegal huh? Yeah okay, I've been in this business for 20 years and have seen these games. Nice post though calling people ignorant that don't have your point of view. Very professional of you.

  34. Don says:

    While I MAY agree that some of the MSA’s out there were not good for consumers, MOST of what PHH does in this arena was through JV’s, Not MSA’s. A joint business venture is completely legal and in no way shape or form hurts the customer. It is like an auto dealer also having a body shop or a gas station having a car wash. Does one service provider bringing another service to the opportunity of the consumer create an unfair, deceptive environment? Absolutely NOT! Like most other lenders across the country, PHH has abandoned the MSA model. Great for big government, bad for main street… shame on the CFPB once again!

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