CFPB seeks $18m judgment against California mortgage company

by Ryan Smith18 May 2020

The Consumer Financial Protection Bureau has filed a proposed settlement to resolve allegations that a California mortgage lender, along with several related individuals and companies, unlawfully obtained credit reports and charged customers millions of dollars in illegal fees.

In January, the CFPB filed an injunction against California mortgage lender Chou Team Realty, which does business as Monster Loans, along with several related companies and individuals including Thomas Chou and Sean Cowell. The CFPB alleged that Chou and Cowell masterminded a scheme to use Monster Loans’ account with a major credit bureau to unlawfully obtain consumer reports to use in their associated student loan debt-relief business. The debt-relief business, in turn, allegedly used those reports to deceptively market their services nationwide and then charged consumers illegal fees. 

The CFPB alleged that between 2015 and 2017, Monster Loans obtained consumer reports for more than 7 million people based on the false representation that the information would be used to offer the consumers mortgage loans. However, Monster Loans instead allegedly provided the reports to several associated debt-relief companies to use in marketing efforts. In 2017, Monster Loans helped create an entity called Lend Tech Loans – a company that purported to be a mortgage brokerage, but allegedly was used solely to illegally obtain consumer report information. The CFPB alleged that Lend Tech Loans wrongfully obtained consumer reports for more than 12 million people between 2017 and 2019.

The associated student loan debt-relief companies allegedly violated the Consumer Financial Protection Act and the Telemarketing Sales Rule by making “deceptive representations” about their services and unlawfully collecting advance fees for debt-relief services, the CFPB said.

Chou and Cowell were officers in Monster Loans and investors in the student loan debt-relief companies, the CFPB said. 

If the proposed settlement is accepted by the court, it would impose an $18 million redress judgment against Monster Loans, ban Monster Loans, Chou and Cowell from the debt-relief industry, and impose a $450,001 civil penalty against them.