Third California Lender Fined for LOC Violations

For the third time this month a mortgage company, this one<bin the process of dissolution, has been charged with violating the LoanrnOriginator Compensation (LOC) Rule.  ThernConsumer Financial Protection Bureau (CFPB) said it has ordered GuaranteernMortgage Corporation, a California Mortgage Bank, to pay a civil penalty ofrn$228,000 for its alleged infractions.</p

Accordingrnto CFPB, the company, which operated 10 branches in the San Francisco Bay Area,rnpaid loan originators in part based on the interest rates of loans they originated.  Branch managers, and in some cases loan originatorsrnset up marketing services entities into which Guarantee made compensation payments.rnAccording to the consent order the fees were basedrnon the profitability of the associated branch and on the interest rates chargedrnon the originated loans.  Thernentities’ owner-operators drew a portion of those fees as additional compensation.  </p

As a result, CFPB said, branch managersrnreceived compensation based on the interest rates of the loans they originatedrnin violation of the Loan Originator Compensation Rule that has been enforcedrnsince July 2011. </p

SincernJune 1 CFPB has taken action against two other California mortgage lenders,rnProvident Funding Associates and RPM Mortgage, Inc.rnand individually against the latter’s CEO, Erwin Robert Hirt, for violations ofrnthe LOC.  Like Guarantee, RPM had alsornset up separate accounts in an apparent attempt to conceal the additionalrncompensation.

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