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CFPB accuses Castle and Cooke of running illegal bonus scheme

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Mortgage Professional America | 24 Jul 2013, 04:42 AM Agree 0
The CFPB has taken aim at a mortgage company accused of giving illegal bonuses for pushing customers to pricier mortgages
  • Eric M | | 23 Jul 2013, 01:58 PM Agree 0
    "Consumers should be able to get a mortgage without worrying about how the financial incentives of their mortgage officers may cause them to pay higher rates than they actually qualify for,” Cordray said. Why?
  • Carlo Sanchez | | 23 Jul 2013, 02:03 PM Agree 0
    WOW!! That is so subjective in the editorial description. So they paid bonuses at a time when bonuses were legal to give out, years ago, but now that they are illegal to hand out they CFPB is doing nothing against the big banks like BofA that are handing out bonuses to employees to let homes go into foreclosure. The CFPB is a JOKE!!
  • Eric M | | 23 Jul 2013, 02:05 PM Agree 0
    I go in to buy a car and give them all my credit info, ss#, job, salary etc. They come back with a payment, I haggle with them and get the payment down. I don't haggle with them and accept the payment, I walk away and go someplace else. It is called shopping around! This is supposed to be a capitalistic country. I think the CFPB should be looking into all car dealers and see if they are not pushing their sales people to sell more expensive cars with more expensive upgrades. All consumers should be able to get cars and not have to worry about what finanicial incentive their salesperson is getting that may cause their payments to be higher!
  • Rikard Kilgaren | | 23 Jul 2013, 02:06 PM Agree 0
    Mainly Wall Street Sewer Rats, Faulty Appraisals, and crooked Real Estate Agents are essentially what caused the "financial crisis." It is all at the feet of the DC Bureaucrats and the Wall Street Sewer Rats.
  • Tim K | | 23 Jul 2013, 02:07 PM Agree 0
    Just like Wall Street has my best interest in mind.
  • Wm Matz | | 23 Jul 2013, 02:25 PM Agree 0
    Wow! Lenders paid 4-5 pt rebates on neg ams, and the regulators had no problem.

    The problem for Cordray [and consumers] is that courts have repeatedly said that mortgage officers at lenders have no duty to borrowers. Therefore, no borrower should ever get a home mortgage from a bank or other direct lender if at all possible. Brokers should be screaming that only a broker has a fiducuary duty to the borrower that makes such steering illegal [at least in CA].
  • Bryan | | 23 Jul 2013, 02:27 PM Agree 0
    I agree with the capitalist idea pertaining to the car industry, but the car industry financing didn't bring down the econonmy buddy. Also, yes, you can shop around, but mortgage officers were always switching mortgages up right before closing and making the borrower feel that they had no choice but to just close the mortgage with them. Under the pressure of just taking a .25% higher rate and a $30 higher payment, or not closing at all and starting over with another company, 9 out of 10 people will just close and move on while the LO reaps thousands.

    Also, Eric, you don't file a complaint in FEDERAL court if the case doesn't have merit. I'm sure it was more than just "they could have shopped".
  • Nathan | | 23 Jul 2013, 02:32 PM Agree 0
    Please tell me why the CFPB thinks it's not OK for the mortgage industry to involve a little good old fashioned negotiation for the customer to get the best deal on each individual deal... I want to know when they are going after EVERY SINGLE commission position in the country in every single industry because if they aren't then THEY are unfairly targeting employees of the mortgage industry (try insurance, car sales, electronics sales, appliance sales, securities sales, just to name a few!). Also, if their purpose is truly to promote fair business practices for all consumers, why don't they go after all the politicians to make them follow their own laws that they pass but then exempt only themselves from having to follow those same laws? Oh ya, and don't forget all those exemptions to those same laws they only give for large contributors to their campaign coffers... Don't get me started on how the government needs to get out of private business because they are as corrupt as any individual business ever has been!
  • Mary Fay V | | 23 Jul 2013, 02:44 PM Agree 0
    After everything we as mortgage originators have been through, blamed for subprime mortgages, commissions reduced, federal and state tests and laws that are designed to make the independent lender vanish, now we have to fear the CFPB going back in time? We still originate mortgages so the consumer has choice. With no competition the banks will win. They will have salary paid LO's and have you noticed the interest rate is now 2% above the 10 year yield? How much will the bank add to the yield when there is no competition? As the independent lender goes away so will the consumer right to have low rates. Loan originators need to wake up and form a union! I have never seen one industry so shafted. I'll happily pay union dues for someone to make my voice heard and protect my job.
  • James Wu | | 23 Jul 2013, 03:02 PM Agree 0
    The country is going to communist. When wall st and banks still earn big money. You can see those banks mortgage profit get increased.

    Smart broker and mortgage officers still be able to find a way to by pass this regulation. This company is a dummy. It can record in the payment plan and make it compliance. No much difficult.
  • Dave S | | 23 Jul 2013, 03:47 PM Agree 0
    The big banks can change what they want , make what they want and all their folks are exempt from registration and continuing Education , People better wake up for they will be paying an extra 2 % on every mortgage with no competion!
  • Elaine R | | 23 Jul 2013, 03:57 PM Agree 0
    The system is looking for the "fall guy" and the mortgage broker is "it". Nothing would make the banks happier then us going away.
    I'm not going away.........I'm going to keep kicking and screaming and stay in this business until the bitter end. Which, unfortunately, I don't think is far off. The banks always win and they will win again.
  • Brandon W | | 23 Jul 2013, 04:12 PM Agree 0
    Banks push people to higher interest mortgages ALL of the time. If it weren't for mortgage brokers, they'd stick to the consumers even harder on rates & fees both. Mortgage brokers in general are BETTER at explaining mortgage options as well (assuming the bank even has multiple options).
  • Ed | | 23 Jul 2013, 04:31 PM Agree 0
    Bryan, good point almost. But I think you are getting Loan Originators mixed up with faulty mortgage guidelines set up by Wall Street to give every person a mortgage regardless of abillity to repay. The Govt. was pressuring these idiotic mortgages to Fannie and Freddy's because Wall Street was doing such a good job (not) and ultimately the whole house of cards came down and not one politician or Wall Street dude has been singled out. Keep picking on the salesman that had absolutely nothing to do with it. As far as the bait and switch of mortgages, there has always been laws for that and they don't enforce those either. If they didn't enforce laws like Bank Robbery then everyone would rob banks. It is as simple as that! We don't need more regulation we just need to regulate/enforce what we have!
  • Truth in Lending | | 23 Jul 2013, 06:09 PM Agree 0
    Wm Matz, steering is alive and well in the broker community. Brokers set up higher/lower comp plans with different lenders and when they feel like making more on a borrower, they steer and submit the mortgage to a lender who will pay them more for originating it....and that ALWAYS results in a consumer paying a higher rate.

    And I would say 90% of all direct lenders encourage LO's to overprice a mortgage so they can retain the rebate, which is then paid back to them at some point in the form of a bonus......usually in the name of 'quality' mortgage submissions.

    Either way, the borrower is still getting shafted and lied to.
  • Michael | | 23 Jul 2013, 06:25 PM Agree 0
    To begin with most bank platform employees are not required to jump through hoops, testing and licensing that a mortgage originator does. They get an incentive for referring bank customers to their financial representatives. They discuss rates, terms and requirements that only should be disclosed by a licensed originator. The financial expert at the bank who is also not subject to the same licensing requirements gets paid commission. The bank doesn't have to disclose their fees in the same way a broker does. Does it make any difference that the platform associates get paid commission or incentives for opening checking and savings and relationship accounts ?Should that be tested and regulated? Should there be a limit on how much every single business in America earns in profit and bonus? This is capitalism. Yes, there should be som equity, some controls within reason so that there is no consumer gouging. We have regulations in place for that. They need to be enforced. Disclosure timing is good for the most part. I love playing the "game" as long as we all play by the same rules. Are the banks limited to earnings on a mortgage, true earnings not just the undisclosed ones? Let us not involve and regulate other commissioned salespeople, lets encourage consumers to shop and gain confidence in the person they're doing business with. Let us prosecute the abusers, not the honest earners. Or we will have to start watching every manufacturer and salesperson from the one selling dentures and crowns to the builder to the retailer of every consumable product. We have laws and guidelines in place. All industries should be allowed their due and reasonable profit. You gotta love this profession which we have chosen, you've gotta love more about it than the money. We provide an honest service and assist those who don't understand the process and should be allowed to be paid as a professional.
  • Susana | | 24 Jul 2013, 06:21 AM Agree 0
    I did a brief stint at a Bank before going back to brokering. How does this sound? On a refinance we were REQUIRED to lock the customer on the rate that very day! And charge their account for the appraisal and processing to make sure they didn't take their mortgage elsewhere. Also, they had to take a higher rate because the Bank simply did not get the mortgage done in less than 45 to 60 days. On any given mortgage the Bank was making mach more than a broker. I couldn't stand what the Bank was doing to its customers, so after a few months, I went back to Brokering as I had been doing for 20 years. My clients get better service, better rates, better everything as I make sure I work very hard for THEM not the BANK. "A bank that is too big to fail is also too big to get anything done." Yes, you can quote me.
  • Wm Matz | | 24 Jul 2013, 09:03 AM Agree 0
    Truth in Lending, that's not necessarily true. Most brokers enter into a fee agreement with the borrower and then shop for the best rate/terms. The critical difference is that if a broker violates the fiduciary standard, the borrower has recourse, whereas there is none against mortgage officers. Eliminating this double standard is essential, but it is vigorously opposed by Wall St/big banks
  • Gordon Schlicke | | 24 Jul 2013, 12:05 PM Agree 0
    The banks (and others) buy the legislation they want. Until that stops brokers will have to live with what they get. An entire generation has to rise up together to stop our corrupt system.
  • Frank | | 24 Jul 2013, 12:14 PM Agree 0
    Ed on 7/23/2013 4:31:06 PM Ed, great comment! Its the regulators fault for allowing these type of mortgages, NOT THE SALESMAN! You couldnt have said it better. Wall Street is to blame, not the Originators.
  • Dan Smith | | 24 Jul 2013, 03:37 PM Agree 0
    Put them all in jail!
  • Rick | | 24 Jul 2013, 07:47 PM Agree 0
    CFPB is a joke.
  • Bayview Mortgage, Inc. | | 26 Jul 2013, 05:46 PM Agree 0
    All this could be stopped if the NMLS just posted each originators points spread and each houses(mortgage brokers and Lenders) hit on the rate before the rates comes into the office. A borrower then can make an educated choice. As it is now. Its still borrower beware.
  • A Banker | | 30 Jul 2013, 09:04 AM Agree 0
    Hopefully the bank-bashing is referring to the big banks. We're a small community bank that abides by the rules just like a broker. I've been in the mortgage business 32 years and seen a lot. Our LO's may not have to be subjected to licensing, but they have to be re-tested on regulatory practices - 4 to 6 courses per quarter to meet our OCC requirements. We have 6 OCC regulators sitting in our conference room as we speak reviewing our work for TIL. They're here twice a year and yet we're still subjected to CFPB scrutiny. Just like we all became the scapegoat for the mortgage debacle when it was Wall Street's doing, banks are now all being put into one category as the bad guy. We're not. Like most people in this business. I don't see how the CFPB is going to help anything. They'll need to fine us so they can cover the cost of their department.
  • Debbie | | 30 Jul 2013, 01:56 PM Agree 0
    The elephant in the room, CFPB exists to protect the consumers. So what these consumers?
    If the government really wanted to prevent the problems of the past from happening again, they might consider having financial literacy a part of high school education. After all, we are graduating new consumers every year that are not prepared to make personal financial decisions. Many adults are signing contracts, borrowing money and they do not have a clue. So why not teach kids and adults practical life skills? It is hard to take advantage of someone that can think for themselves and ask questions. What happened to critical thinking?
    Forcing Brokers out of business is wrong and foolish. We have played a very positive role in truth. Yes, there were bad players as we all know but there were far more good mortgages made than were moused.
    It is wrong to allow anyone to treat us, Brokers unfairly, to give one group a pass on CFPB audits or single us out to have our comp controlled or counted differently. Wrong is wrong! Why is it OK to destroy an entire industry? How will this help the housing market or our economy?
  • B. Parks | | 01 Aug 2013, 12:28 PM Agree 0
    If you all our garbage men strike, we all get rats and roaches in the streets and the community is unsafe, dirty and crawling with viruses. So, I get it.

    We do need to have boundaries and structure in place. What I don't like is the CFPB ignoring big bankers profit sharing.
    Brokers are more than likely LLCs, and S-Corps and pay out bonuses.

    Banks are more than likely C-Corps and pay out "dividends". Its the same stuff, just a different title.

    Look at the dividends to shareholders and look into how the banks take income. Isn't it all tied to a certain "margin"??
    Who sets that number? They do!
    What's the difference?

    If you go online and run a rate quote on Bankrate, why is it all differently priced?
    You will see a low ball liar and you will see the honest pricing somewhere at the top.
    Who do you think get all the calls and will the consumer get the advertised rate?
    Probably not. Capitalism is one of main the reasons we all still exist. Not brokers but the USA!

    So, if anything, if they keep chasing this up the ladder, we become more communist and controlled. That's a whole different topic.
    Seems like that's where things are headed. I sure hope not.
  • Ruben | | 06 Aug 2013, 10:29 AM Agree 0
    The CFBP is trying to protect the consumer? what a joke why don't they go after the banks that are getting the biggest margins in rates overall, and stop worrying on how much money the mortgage officer is making, why don't they regulate what interest rate you can give to the consumer and what is legal to charge and what not. I can assure you if the regulation came down as: broker, banker, bank you can only blend 2% on prime and you can only charge in total fees from borrower a max of 5% all of this crap of how much money a mortgage originator can make would end pretty quick. Of course this is pretty communist when a government entity is telling you how much money you can make is pretty scary no free market anymore.
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