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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.

According 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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