The CFPB’s latest crackdown on Castle & Cooke Mortgage for its loan officer bonus plan is interrupting the normal course of business and competition, a former association president has said.
Bill Kidwell, the 2007 former president of the Colorado Association of Mortgage Brokers, told MPA it shouldn't matter what employees are paid if borrowers are aware of what they're paying.
“Why should regulators be able to decide how I pay my employees if I am offering a competitive product to borrowers?” Kidwell said.
In announcing its action against Castle & Cooke, CFPB director Richard Cordray argued that consumers should be able to get mortgages without fear of how financial incentives paid to loan officers could affect the rate they pay. But Kidwell argued that there was nothing unfair or deceptive about making a profit.
But the CFPB has argued that incentivizing loan officers to upcharge consumers by distributing bonuses based on the interest rates of loans sold is unlawful. It is looking to secure restitution for those consumers that were upsold, the organization said.
While it may be generally agreed that the practice of charging unaffordable rates to consumers is wrong, Kidwell is one among many who is fearful and angry about the CFPB’s overarching power over the way mortgage originators compensate their employees. The industry should be “left to its own devices,” Kidwell said.