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July 30, 2013
CFPB sues mortgage loan originator
July 31, 2013 – The CFPB filed suit against mortgage firm Castle & Cook Mortgage LLC, claiming the company illegally gave bonuses to loan officers for pushing consumers into mortgages with higher interest rates.
In its press statement, the bureau said it is "seeking an end to this unlawful practice, restitution for those consumers who were upcharged, and civil money penalties." The CFPB alleges that Utah-based Castle & Cooke Mortgage violated the Federal Reserve Board's loan originator compensation rule, which had a mandatory compliance date of April 6, 2011. This rule banned compensation based on loan terms, including the interest rate of the loan.
Castle & Cooke Mortgage, which operates in 22 states, originated about $1.3 billion in loans in 2012.
"Today we are taking action against the type of practices that precipitated the financial crisis," said CFPB Director Richard Cordray in the press statement. "Consumers should be able to get a mortgage without worrying about how the financial incentives of their loan officers may cause them to pay higher rates than they actually qualify for."
The CFPB released a new mortgage loan originator compensation rule in February 2013 that will take effect in January.
"NAFCU continues to monitor the CFPB's enforcement actions. Credit unions did not engage in the unscrupulous mortgage lending practices that led to the financial crisis. As member-owned cooperatives, they work with their members to ensure they are offered and provided mortgage loans that place them in the best position possible to repay," said NAFCU Regulatory Affairs Counsel PJ Hoffman.
In its press statement, the bureau said it is "seeking an end to this unlawful practice, restitution for those consumers who were upcharged, and civil money penalties." The CFPB alleges that Utah-based Castle & Cooke Mortgage violated the Federal Reserve Board's loan originator compensation rule, which had a mandatory compliance date of April 6, 2011. This rule banned compensation based on loan terms, including the interest rate of the loan.
Castle & Cooke Mortgage, which operates in 22 states, originated about $1.3 billion in loans in 2012.
"Today we are taking action against the type of practices that precipitated the financial crisis," said CFPB Director Richard Cordray in the press statement. "Consumers should be able to get a mortgage without worrying about how the financial incentives of their loan officers may cause them to pay higher rates than they actually qualify for."
The CFPB released a new mortgage loan originator compensation rule in February 2013 that will take effect in January.
"NAFCU continues to monitor the CFPB's enforcement actions. Credit unions did not engage in the unscrupulous mortgage lending practices that led to the financial crisis. As member-owned cooperatives, they work with their members to ensure they are offered and provided mortgage loans that place them in the best position possible to repay," said NAFCU Regulatory Affairs Counsel PJ Hoffman.
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