“CFPB Takes Action Against Former Wells Fargo Employee for Illegal
The Consumer Financial Protection Bureau (CFPB) took action against a former
employee of Wells Fargo who illegally shifted mortgage fees to increase
his commission. The employee, David Eghbali, referred a large number of
loan closings to a single escrow company and manipulated fees from some
customers to others.
The CFPB contends that Eghbali’s fee-shifting scheme allowed him
to alter mortgage costs and increase the amount of commissions he received.
As a result, the CFPB filed an administrative consent order, ordering
Eghbali to pay some $85,000 in penalties and banned him from engaging
in mortgage activities for one year.
A Wells Fargo spokesperson, Tom Goyda, issued a statement saying, “Our
existing compliance processes and controls worked effectively to identify
and address these isolated activities. Following a thorough review that
confirmed the improper activities, we took strong corrective action; including
terminating Eghbali and discontinuing any further engagement with the
escrow company involved.”
However, in response to Wells Fargo’s statement, Eghbali claimed
that he had not been fired from the organization. Rather, he says he resigned
in July 2015, and placed the blame squarely on the bank, saying the bank’s
criticism is “disingenuous” given that the bank never alerted
him that his actions were in violation of “any laws or regulations.”
In proclaiming his innocence, Eghbali went on to say, "My number one
priority has always been my clients and I have worked diligently on their
behalf every day.” He claimed that no customers were harmed by his
actions and, "At no time did I understand or believe that the way
I structured my clients’ loans was in violation of RESPA or any
other law or regulation."
Upon further investigation, the CFPB discovered that while Eghbali was
employed with Wilshire Crescent Wells Fargo branch as a loan officer,
he had an arrangement with New Millenium Escrow from November 2013 to
February 2015, during which time he manipulated the prices his customers
would pay for escrow services.
Through their investigation, the Bureau found that under Eghbali’s
direction, New Millennium would reduce their escrow fees for some borrowers.
This practice allowed Eghbali to create business by offering “no
cost” loans to discerning clients who may have gone to a competing
bank for their mortgage, and making up the difference by increasing escrow
costs on other consumers.
CFPB Director Richard Cordray issued a statement saying, “We have
taken action against an individual loan officer for illegal mortgage fee-shifting.
This should send a strong message that the law must be followed not only
by large financial institutions but also by the individuals who work for
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