Utah Mortgage Lender Fined for Steering Customers Into Costlier Loans

November 7, 2013
Denver Post  
mortgage lending news

Utah-based Castle & Cooke Mortgage, which has a presence in nearly two dozen states, is accused of handing out 1,100 quarterly bonuses to 215 loan officers as a reward for signing customers up for more expensive loans, the Consumer Financial Protection Bureau (CFPB) announced on Nov. 7. The Federal Reserve made that anti-customer practice illegal in April 2011 when it banned tying compensation to loan terms, including the interest rate.

The CFPB has proposed a consent order, pending federal approval, that would require Castle & Cooke to repay $9.2 million to about 9,400 customers who took out loans after the rule change. On top of restitution, Castle & Cooke drew a fine of $4 million, which will add to the regulator's civil penalty fund. "This outcome embodies our mission -- to root out bad practices from the marketplace and ensure consumers are being treated fairly," according to a statement from CFPB director Richard Cordray.

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