The CFPB ordered Guarantee Mortgage Corporation to pay the penalty for paying its branch managers based in part on the interest rates of the loans they closed.
Guarantee, which is now out of business, was a mortgage banking firm with 10 branches in the San Francisco Bay Area. According to the CFPB, the firm paid originators based in part on the interest rates of loans they closed. That’s a violation of the Loan Originator Compensation Rule, which aims to prevent originators from steering customers into loans with unnecessarily high interest rates.
Guarantee funded the compensation by making payments to marketing services entities owned in part by company branch managers and other Guarantee originators. The originators then drew a portion of those funds as compensation.
Guarantee, which is in the process of dissolving, will have to pay the ordered fine to the CFPB’s Civil Penalty Fund.
The Consumer Financial Protection Bureau has ordered a defunct California mortgage bank to pay $228,000 for paying illegal incentives to its loan officers.