California Real Estate Fraud Report

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CFPB Files Suit against Law Firm, Alleging RESPA Violations

The Consumer Financial Protection Bureau (CFPB) has filed a lawsuit in federal district court against a Kentucky law firm, accusing it of violations of the Real Estate Settlement Procedures Act (RESPA).

RESPA is a consumer protection law. It prohibits both taking and giving kickbacks for referrals of settlement services where federally related mortgages are involved. The theory behind the act is that competition – and therefore consumers – are hurt when companies pay kickbacks (“referral fees”), ultimately costing more to consumers for those services. It also creates an uneven playing field for competing businesses.  

Borders & Borders, PLC and its principals Harry Borders, John Borders, Jr., and J. David Borders are accused of illegally paying kickbacks for real estate ettlement referrals using a network of shell companies.

According to CFPB Director Richard Cordray, “Today’s action sends a clear message that companies cannot design business structures to hide illegal kickbacks. The CFPB will continue to pursue companies that seek to profit from convoluted arrangements that limit competition and hurt honest businesses.” The CFPB alleges that the violations o

The firm and its principals are being defended by T. Morgan Ward Jr., an attorney with Louisville law firm Stites & Harbison PLLC. Ward released a statement by Borders & Borders, that said “We are a family-owned firm that has been in business for over 40 years, and we would not and did not violate (the Real Estate Settlement Procedures Act). This case concerns a number of agencies that were affiliated with our firm several years ago. The title agencies were ‘affiliated business arrangements’ that are expressly allowed by RESPA.”

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The information and notices contained on The California Real Estate Fraud Report are intended to summarize recent developments in real estate fraud, mortgage fraud, short sale fraud, REO fraud, appraisal fraud, loan modification scams, loan modification fraud and other real estate related crimes occurring in Los Angeles and California. The posts on this site are presented as general research and information and are expressly not intended, and should not be regarded, as legal advice. Much of the information on this site concerns allegations made in civil lawsuits and in criminal indictments. All persons are presumed innocent until convicted of a crime. Readers who have particular questions about real estate fraud, mortgage fraud and appraisal fraud matters or who believe they require legal counsel should seek the advice of an attorney.

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