Paul Taylor, Paul Taylor Homes Limited, and Paul Taylor Corp
Documents in this case
- Consent order · 12 p.
- Stipulation · · 5 p.
Case summary
The Bureau ordered a Texas homebuilder, Paul Taylor, to surrender more than $100,000 he received in kickbacks for referring Mortgages business to Benchmark Bank and to Willow Bend Mortgage Company. The Bureau is also prohibiting Taylor from engaging in future real estate settlement services, including Mortgages.
Consent order
PDF of this document (12 pages)
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UNITED STATES OF AMERICA Before the CONSUMER FINANCIAL PROTECTION BUREAU ADMINISTRATIVE PROCEEDING File No. 2013-CFPB-0001 In the Matter of:
Paul Taylor, Paul Taylor Homes Limited, and Paul Taylor Corp.
CONSENT ORDER The Consumer Financial Protection Bureau (“CFPB”), through its staff, conducted an investigation of violations of the Real Estate Settlement Procedures Act of 1974 (“RESPA”), 12 U.S.C. § 2601 et seq., by Paul Bennett Taylor (“Taylor”), Paul Taylor Homes Limited (“PTH”), and Paul Taylor Corp. (collectively, “Respondents” as defined below) and has identified the following violations of law: accepting “fee[s], kickback[s], or thing[s] of value” in exchange for referrals of customers for real estate settlement services involving federally related mortgage loans in violation of Section 8(a) of RESPA. The CFPB hereby issues, pursuant to 12 U.S.C. §§ 5563 and 5565, this Consent Order (“Order”).
I Overview The CFPB finds, and Respondents neither admit nor deny, that Respondents have engaged in violations of RESPA, in connection with a joint venture, Stratford Mortgage Services (“Stratford”), created by Taylor and Benchmark Bank (“Bank”). In return for Taylor or PTH referring customers seeking mortgage loans to Stratford, Taylor received payments. These 2013-CFPB-0001 Document 1 Filed 05/17/2013 Page 1 of 12
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payments were in violation of Section 8(a) of RESPA which prohibits payment or acceptance of any fee, kickback, or thing of value pursuant to any agreement or understanding, oral or otherwise, to refer customers for real estate settlement services (including but not limited to mortgage loans).
The CFPB also finds, and Respondents neither admit nor deny, that Respondents have engaged in violations of RESPA, in connection with a second joint venture, PTH Mortgage Company (“PTHM”), created by Taylor and Willow Bend Mortgage Company (“WBMC”). In return for Taylor or PTH referring customers seeking mortgage loans to PTHM, PTH received a payment that was intended to compensate Taylor. This payment was in violation of Section 8(a) of RESPA which prohibits payment or acceptance of any fee, kickback, or thing of value pursuant to any agreement or understanding, oral or otherwise, to refer customers for real estate settlement services (including but not limited to mortgage loans). II Jurisdiction 1.
The CFPB has jurisdiction over this matter pursuant to Sections 1053 and 1055 of the Consumer Financial Protection Act (“CFPA”), 12 U.S.C. §§ 5563, 5565, and Section 8 of RESPA, 12 U.S.C. § 2607.
III Stipulation 2.
Respondents have executed a “Stipulation and Consent to the Issuance of a Consent Order,” dated May 14, 2013 (“Stipulation”), which is incorporated by reference and is accepted by the CFPB. By this Stipulation, Respondents have consented to the issuance of this Consent Order (“Order”) by the CFPB pursuant to Sections 1053 and 1055 of the 2013-CFPB-0001 Document 1 Filed 05/17/2013 Page 2 of 12
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CFPA, 12 U.S.C. §§ 5563 and 5565, without admitting or denying any findings of fact or conclusions of law, except that Respondents admit the CFPB’s jurisdiction over Respondents and the subject matter of this action. IV Definitions 3.
For purposes of this Order, the following definitions shall apply: a.
“Effective Date” shall mean the date on which the Order is issued. b. “Enforcement Director” shall mean the Assistant Director of the Office of Enforcement for the Consumer Financial Protection Bureau. c.
“Respondents” shall mean Paul Taylor, Paul Taylor Homes Limited, and Paul Taylor Corp., including their successors and assigns.
d. “Related Consumer Action” shall mean a private damages action, or enforcement action by another governmental entity, brought against Respondents by or on behalf of one or more consumers based on substantially the same facts as set forth in Section V of this Order.
e.
“Relevant Time Period” shall include the period from March 29, 2010, to the Effective Date.
CFPB FINDINGS V Findings of Fact The CFPB finds the following:
4.
During the Relevant Time Period, Taylor was the president of Paul Taylor Corp., which is the general partner of PTH, a homebuilding company based in Dallas, Texas. 2013-CFPB-0001 Document 1 Filed 05/17/2013 Page 3 of 12
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5.
Benchmark Bank (“Bank”) is a bank chartered under Texas law, based in Plano, Texas, and insured by the Federal Deposit Insurance Corporation (“FDIC”). During the Relevant Time Period, the Bank originated home mortgages.
6.
In 1999, Taylor and Stratford Mortgage Corp. (“SMC”), a wholly-owned subsidiary of the Bank, entered into a joint venture to establish Stratford Mortgage Services, LC (“Stratford”). SMC and Taylor each contributed $25,000 to Stratford’s initial capitalization in exchange for a 50% ownership interest. The purported purpose of the joint venture was to conduct mortgage originations through Stratford. 7.
At Stratford’s creation, Taylor served as its Vice President, the President of the Bank served as Stratford’s President and CEO, and the Advisory Director of the Bank served as Stratford’s Secretary.
8.
Taylor and/or PTH referred PTH customers to Stratford for mortgage origination services. 9.
During the Relevant Time Period, 32 loans were originated through Stratford as a result of referrals made by Taylor and/or PTH.
10.
Stratford conducted no origination business outside of the referrals sent to it by Taylor and/or PTH.
11.
Stratford did not advertise itself to the public.
12.
When loans were originated through Stratford, the Bank funded the loans and held them on its books until they were sold into the secondary market. 13.
For all loans originated through Stratford during the Relevant Time Period, the Bank’s Centralized Residential Loan Department conducted the underwriting, processing, and closing functions.
14.
All mortgage origination activities undertaken in the name of Stratford during the Relevant Time Period were performed by a single employee of the Bank (“Bank 2013-CFPB-0001 Document 1 Filed 05/17/2013 Page 4 of 12
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Employee”). At all times relevant to this action, Stratford lacked any formal employment agreement with Bank Employee, or any other individual. 15.
Stratford did not have its own office space. Bank Employee performed all of his work relating to loans originated through Stratford at his office space at the Bank. Stratford did not have a rental agreement with the Bank for use of the Bank’s space. 16.
All of Stratford’s essential functions were either performed by Bank Employee or other employees of the Bank.
17.
At all times since Stratford was formed, Taylor received periodic distributions from Stratford (or the Bank), purportedly based on his ownership interest in Stratford. During the Relevant Time Period, Taylor received $106,194.20 in such distributions. 18.
Stratford was dissolved on November 18, 2011. Subsequently, on or about June 1, 2012, the FDIC imposed a civil money penalty on the Bank after the FDIC “determined that the Bank violated [RESPA] by creating and operating a company that was used by [the Bank] as a conduit for paying unlawful referral fees … for the referral of mortgage loan customers to the Bank.” Stratford was the company “used as a conduit for paying unlawful referral fees” and Taylor was the recipient of those fees. 19.
WBMC is a mortgage lender based in Texas. At all times relevant to this action, WBMC originated home mortgages.
20.
In 2003, Taylor and WBMC entered into a joint venture, PTHM. 21.
Taylor and/or PTH referred PTH customers to PTHM for mortgage origination services. 22.
All mortgages originated through PTHM were financed by WBMC. 23.
Taylor received periodic distributions from PTHM purportedly based on his ownership interest in PTHM.
2013-CFPB-0001 Document 1 Filed 05/17/2013 Page 5 of 12
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24.
On October 20, 2010, PTH received $12,000 pursuant to a service agreement between WBMC and PTH that was intended to compensate Taylor for referrals made to PTHM. VI CONCLUSIONS OF LAW In light of the factual findings set forth in Section V above, the CFPB concludes: Violation #1 of RESPA Section 8(a) 25.
Taylor, by receiving distributions couched as a return on an ownership interest in Stratford, accepted a “fee, kickback, or thing of value,” pursuant to an agreement or understanding, in exchange for referring customers of PTH to Stratford for settlement services involving federally related mortgage loans, in violation of 12 U.S.C. § 2607(a). 26.
These distributions are not subject to the “safe harbor” for affiliated business arrangements in 12 U.S.C. § 2607(c)(4) because Stratford did not constitute a bona fide “provider of settlement services” within the meaning of RESPA and instead was a sham controlled business arrangement as described in U.S. Department of Housing and Urban Development Statement of Policy 1996-2 Regarding Sham Controlled Business Arrangements, 61 Fed. Reg. 29,258 (June 7, 1996).
Violation #2 of RESPA Section 8(a) 27.
PTH, by receiving a payment pursuant to a service agreement with WBMC that was intended to compensate Taylor for referrals made to PTHM, accepted a “fee, kickback, or thing of value,” pursuant to an agreement or understanding, in exchange for referring customers of PTH to PTHM for settlement services involving federally related mortgage loans, in violation of 12 U.S.C. § 2607(a).
CONDUCT PROVISIONS 2013-CFPB-0001 Document 1 Filed 05/17/2013 Page 6 of 12
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VII Order to Cease and Desist and to Take Other Affirmative Action IT IS HEREBY ORDERED, pursuant to Sections 1053 and 1055 of the CFPA that: 28.
Respondents, and their agents, and any entity in which they have a direct or beneficial ownership interest of more than one percent shall cease and desist from engaging in real estate settlement services (other than the sale of homes), or maintaining an ownership interest in any entity that provides or purports to provide real estate settlement services, for a period of five years from the date of this Order. MONETARY PROVISIONS VIII Order to Pay Disgorgement IT IS FURTHER ORDERED that:
29.
A judgment for equitable monetary relief in the form of disgorgement is hereby entered in favor of CFPB and against Taylor, in the amount of one hundred eighteen thousand one hundred ninety-four dollars and twenty cents ($118,194.20). 30.
Within 10 days of the Effective Date, Taylor shall pay the above amount in the form of a wire transfer to the CFPB or such agent as the CFPB may direct, and in accordance with wiring instructions to be provided by counsel for the CFPB. 31.
With regard to any equitable monetary relief or damages that Taylor pays pursuant to this Section if Taylor receives, directly or indirectly, any reimbursement or indemnification from any source, including but not limited to payment made pursuant to any insurance policy, or if Taylor secures a tax deduction or tax credit with regard to any federal, state, or local tax, Taylor shall: (a) immediately notify the Enforcement Director in writing, and 2013-CFPB-0001 Document 1 Filed 05/17/2013 Page 7 of 12
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(b) within 10 days of receiving such funds or monetary benefit, Taylor shall transfer to the CFPB or to such agent as the CFPB may direct, and in accordance with wiring instructions to be provided by counsel for the CFPB, the full amount of such funds or monetary benefit. Taylor, PTH or Paul Taylor Corp. may, without notification to the Enforcement Director, in accordance with applicable tax laws, amend any federal or state tax return previously filed for the years 2010 through 2012, to accurately restate income during those years solely to reflect the disgorgement paid under this order, and they may retain any refunds or tax benefits resulting from the restatement of income. 32.
In the event of any default on Taylor’s obligations to make payment under this Order, interest, computed pursuant to 28 U.S.C. § 1961, as amended, shall accrue on any outstanding amounts not paid from the date of default to the date of payment, and shall immediately become due and payable.
33.
Taylor shall relinquish all dominion, control, and title to the funds paid to the fullest extent permitted by law and no part of the funds shall be returned to Respondent. 34.
In accordance with 31 U.S.C. § 7701, Taylor, unless he already has done so, shall furnish to the CFPB his taxpayer identifying numbers, which may be used for purposes of collecting and reporting on any delinquent amount arising out of this Order. 35.
Within 30 days of the entry of a final judgment, consent order, or settlement in a Related Consumer Action, Respondents shall notify the Enforcement Director of the final judgment, consent order, or settlement in writing. That notification shall indicate the amount of redress, if any, that Respondents paid or are required to pay to consumers and should describe the consumers or classes of consumers to whom that redress will be paid. 36.
Pursuant to Section 604(a)(1) of the Fair Credit Reporting Act, 15 U.S.C. § 1681b(a)(1), any consumer reporting agency may furnish a consumer report concerning any 2013-CFPB-0001 Document 1 Filed 05/17/2013 Page 8 of 12
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Respondent to the CFPB, which shall be used for purposes of collecting and reporting on any delinquent amount arising out of this Order.
COMPLIANCE PROVISIONS IX Order Distribution and Acknowledgment IT IS FURTHER ORDERED that, 37.
Within seven days of the Effective Date, Respondents shall submit to the Enforcement Director an acknowledgment of receipt of this Order, sworn under penalty of perjury. 38.
Within 30 days of the Effective Date, Respondents, for any business for which they are the majority owner or which they directly or indirectly control, shall deliver a copy of this Order to each of its board members and executive officers, as well as to any managers, employees, or other agents and representatives who have responsibilities related to settlement services, including but not limited to employees in a position to refer customers or potential customers to settlement service providers. 39.
For a period of five years from the Effective Date, Respondents, for any business for which they are the majority owner or which they directly or indirectly control, shall deliver a copy of this Order to the managers, employees, or other agents and representatives of such businesses who will have responsibilities related to settlement services, including but not limited to employees in a position to refer customers or potential customers to settlement service providers, before they assume their responsibilities.
40.
Respondents shall secure a signed and dated statement acknowledging receipt of a copy of this Order, with any electronic signatures complying with the requirements of the E-Sign 2013-CFPB-0001 Document 1 Filed 05/17/2013 Page 9 of 12
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Act, 15 U.S.C. § 7001 et seq., within 30 days of delivery, from all persons receiving a copy of this Order pursuant to this Section.
X Notices IT IS FURTHER ORDERED that:
41.
Unless otherwise directed in writing by a CFPB representative, all submissions, requests, communications, consents or other documents relating to this Order shall be in writing and shall be sent by overnight courier (not the U.S. Postal Service), as follows: Enforcement Director Consumer Financial Protection Bureau ATTENTION: Office of Enforcement 1700 G Street, N.W.
Washington D.C. 20552 The subject line shall begin: In re Paul Taylor, File No. 2013CFPB-0001 Provided however that Respondents may send such reports or notifications by first-class mail, but only if Respondents contemporaneously send an electronic version of such report or notification to [email protected]. 2013-CFPB-0001 Document 1 Filed 05/17/2013 Page 10 of 12
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ADMINISTRATIVE PROVISIONS XI Administrative Provisions 42.
Except as set forth in Paragraph 43, the provisions of this Consent Order shall not bar, estop or otherwise prevent the CFPB, or any other federal or state agency or department from taking any other action against Respondents.
43.
The CFPB releases and discharges Respondents from all potential liability for violations of law that have been or might have been asserted by the CFPB based on the practices described in Section V of this Order, to the extent such practices occurred prior to the Effective Date and are known to the CFPB as of the effective date of the Consent Order. Notwithstanding the foregoing, the practices alleged in this Consent Order may be utilized by the CFPB in future enforcement actions against Respondents, and any partnership, joint venture or limited liability company in which Respondents have an ownership interest, including without limitation, to establish a pattern or practice of violations or the continuation of a pattern or practice of violations or to calculate the amount of any penalty. This release shall not preclude or affect any right of the CFPB to determine and ensure compliance with the terms and provisions of the Order, or to seek penalties for any violations thereof.
44.
This Order is intended to be, and shall be construed to be, a final order issued pursuant to Section 1053 of the CFPA, 12 U.S.C. § 5563, and expressly does not form, and may not be construed to form, a contract binding the CFPB or the United States. 45.
This Order shall be effective on the date of issuance, and shall remain effective and enforceable, except to the extent that, and until such time as, any provisions of this Order 2013-CFPB-0001 Document 1 Filed 05/17/2013 Page 11 of 12
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46.
47.
48.
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shall have been amended, suspended, waived, or terminated in writing by the CFPB or its designated agent.
Calculation of time limitations shall run from the Effective Date and shall be based on calendar days, unless otherwise noted.
The provisions of this Order shall be enforceable by the CFPB. Any violation of this Order may result in the imposition by the CFPB of the maximum amount of civil money penalties allowed under section 1055(c) of the CFPA, 12 U.S.C. § 5565(c).
This Order and the accompanying Stipulation contain the complete agreement between the parties. No promises, representations or warranties other than those set forth in this Order and the accompanying Stipulation, and the May 14, 2013 Affidavit signed by Taylor have been made by any of the parties. This Order, the accompanying Stipulation and the Affidavit signed by Taylor supersede all prior communications, discussions, or
understandings, if any, of the parties, whether oral or in writing.
IT IS SO ORDERED, this /F-day of May, 2013.
Richard Cordray Director Consumer Financial Protection Bureau
Stipulation ()
PDF of this document (5 pages)
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2013-CFPB-0001 Document2 Filed 05/17/2013 Page 1 of 5
UNITED STATES OF AMERICA
Before the CONSUMER FINANCIAL PROTECTION BUREAU
ADMINISTRATIVE PROCEEDING File No. 2013-CFPB-0001
STIPULATION AND CONSENT TO THE ISSUANCE OF A CONSENT ORDER
In the Matter of:
Paul Taylor, Paul Taylor Homes Limited, and Paul Taylor Corp.
The Consumer Financial Protection Bureau (“CFPB”) intends to initiate an administrative proceeding against Paul Bennett Taylor, Paul Taylor Homes Limited, and Paul Taylor Corp. (“Respondents”), pursuant to 12 U.S.C. §§ 5563 and 5565, and 12 U.S.C. § 2607, for their receipt of “fee[s], kickback[s], or thing[s] of value” in exchange for referrals of customers for real estate settlement services involving federally related mortgages in violation of Section 8 of
the Real Estate Settlement Procedures Act, 12 U.S.C. §2607.
Respondents, in the interest of compliance and resolution of the matter, and without admitting or denying any wrongdoing, consent to the issuance of the Consent Order to which this
Stipulation is attached (“Consent Order”), and which is incorporated herein by reference.
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2013-CFPB-0001 Document2 Filed 05/17/2013 Page 2 of 5
In consideration of the above premises, the Director of the CFPB, through his authorized
representative, and Respondents stipulate and agree to the following:
Jurisdiction
1. The CFPB has jurisdiction over this matter pursuant to Sections 1053 and 1055 of the Consumer Financial Protection Act (“CFPA”), 12 U.S.C. §§ 5563, 5565, and Section 8 of
the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. §2607.
Consent
2. Respondents, without admitting or denying any wrongdoing, consent and agree to the issuance of the Consent Order.
3. Respondents admit the CFPB’s jurisdiction over Respondent and the subject matter of this action.
4. Respondents consent and agree that the Consent Order shall be deemed an “order issued with the consent of the person concerned” pursuant to 12 U.S.C. § 5563(b)(4), and consent and agree that the Consent Order shall become a final order, effective upon issuance, and shall be fully enforceable by the CFPB pursuant to 12 U.S.C. §§ 5563(d)(1) and 5565.
5. Respondents enter into this Stipulation and Consent Order voluntarily.
6. The Consent Order resolves only the claims asserted against Respondents in this civil proceeding. Respondents acknowledge that no promise or representation has been made by the CFPB or any member, officer, employee, agent, or representative of the CFPB, with regard to any criminal liability or civil liability outside of this action that may have
arisen or may arise from the facts underlying this action or immunity from any such
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2013-CFPB-0001 Document2 Filed 05/17/2013 Page 3 of 5
criminal liability. Respondents waive any claim of Double Jeopardy based upon the settlement of this proceeding, including the imposition of any remedy or civil penalty herein.
7. Respondents agree that the facts set forth in Section V of the Consent Order shall be taken as true and be given collateral estoppel effect, without further proof, in any proceeding before the CFPB based on the entry of the Consent Order, or in any subsequent civil litigation by the CFPB to enforce its rights to any payment or monetary judgment pursuant to the Consent Order, such as a non-dischargeability complaint in any bankruptcy case.
8. The terms and provisions of this Stipulation and the Consent Order shall be binding upon, and inure to the benefit of, the parties hereto and their successors in interest. Nothing in this Stipulation or the Consent Order, express or implied, shall give to any person or entity, other than the parties hereto, and their successors hereunder, any benefit or any legal or equitable right, remedy, or claim under this Stipulation or the Consent Order.
9. Respondents agree that the CFPB may present the Consent Order to the CFPB Director for signature and entry without further notice.
Waivers
10. Respondents, by consenting to this Stipulation, hereby waive: a. Any right to service of the Consent Order upon themselves and agree the Consent Order may be served upon their counsel and such service shall constitute notice to Respondents of its terms and conditions;
b. Any objection to the jurisdiction of the CFPB, including, without limitation, under
section 1053 of the CFPA, 12 U.S.C. § 5563;
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. The rights to an issuance of a notice of charges; all hearings pursuant to the statutory provisions under which the proceeding is to be or has been instituted; the filing of proposed findings of fact and conclusions of law; proceedings before, and a recommended decision by, a hearing officer; all post-hearing procedures; and any other procedural right available under 12 U.S.C. § 5563 or 12 CFR Part 1081;
. The right to seek any administrative or judicial review of the Consent Order;
. Any claim for fees, costs or expenses against the CFPB, or any of its agents or employees, and any other governmental entity, related in any way to this enforcement matter or the Consent Order, whether arising under common law or under the terms of any statute, including, but not limited to the Equal Access to Justice Act and the Small Business Regulatory Enforcement Fairness Act of 1996; for these purposes, Respondents agree that Respondents are not the prevailing party in this action because the parties have reached a good faith settlement;
Any other right to challenge or contest the validity of the Consent Order;
. Such provisions of the CFPB’s rules or other requirements of law as may be construed to prevent any CFPB employee from participating in the preparation of, or advising the Director as to, any order, opinion, finding of fact, or conclusion of law to be entered pursuant to Respondents’ offer of settlement; and
. Any right to claim bias or prejudgment by the Director based on the consideration
of or discussions concerning settlement of all or any part of the proceeding.
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2013-CFPB-0001 Document2 Filed 05/17/2013 Page 5 of 5
CONSUMER FINANCIAL PROTECTION BUREAU BY:
S/is/2018 fansite Enforcement Attorney Date ap: ro is fh — iS Melanie Hirsch, Enforcement Attorney Date
Thigh = v3 7
Date Lihs rE Paul Bennett Taylor Date On behalf of, Paul Taylor Corp., General Partner of Paul Taylor Homes Limited S/ Jun 1S
if “7 7 Paul B aylor Date
President, Paul Taylor Corp.