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Third California Lender Fined for LOC Violations
Wednesday, June 10, 2015
For the third time this month a mortgage company, this one
in the process of dissolution, has been charged with violating the Loan
Originator Compensation (LOC) Rule. The
Consumer Financial Protection Bureau (CFPB) said it has ordered Guarantee
Mortgage Corporation, a California Mortgage Bank, to pay a civil penalty of
$228,000 for its alleged infractions.
to CFPB, the company, which operated 10 branches in the San Francisco Bay Area,
paid loan originators in part based on the interest rates of loans they originated. Branch managers, and in some cases loan originators
set up marketing services entities into which Guarantee made compensation payments.
According to the consent order the fees were based
on the profitability of the associated branch and on the interest rates charged
on the originated loans. The
entities' owner-operators drew a portion of those fees as additional compensation.
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