The CFPB asked a federal district court earlier this week to approve a consent order that would provide more than $9 million in restitution to customers of Castle & Cook Mortgage, which allegedly steered customers into costlier mortgages.
The consent order also imposes a $4 million civil penalty against the company and two of its officers for allegedly giving loan officers illegal kickbacks.
“Our action has put an end to illegal steering of consumers and has put more than $9 million back in their pockets,” CFPB Director Richard Cordray said. “This outcome embodies our mission—to root out bad practices from the marketplace and ensure consumers are being treated fairly.”
In 2012, Castle & Cooke—based in Utah—originated approximately $1.3 billion in loans. The CFPB filed a complaint in July alleging that C&C President Matthew A. Pineda and Buck L. Hawkins, the company’s senior vice president of capital markets, violated the Federal Reserve’s loan originator compensation rule, which bans compensation based on loan terms.
Pineda and Hawkins allegedly paid out over 1,100 quarterly bonuses to more than 215 loan officers based on the interest rates they offered to borrowers.
The defendants agreed to end their compensation practices and to retain records of compensation to ensure they abide by federal statutes.