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CFPB fines defunct Guarantee Mortgage $228,000

Violated the Loan Originator Compensation Rule

The Consumer Financial Protection Bureau ordered defunct Guarantee Mortgage Corporation to pay a civil penalty of $228,000 for paying its branch managers based on the interest rates of the loans they closed. 

Guarantee was a mortgage banking firm that operated 10 branches in the San Francisco Bay Area. 

After investigation, the CFPB found that Guarantee violated the Loan Originator Compensation Rule, which protects consumers from being steered into costlier loans by prohibiting loan originators from receiving compensation based on the interest rates of the loans they close.

The compensation was funded by payments Guarantee made to marketing services entities owned in part by the company’s branch managers and other Guarantee loan originators. The originator-owners drew a portion of those fees as compensation.

This is just the latest in a recent string of fines from the CFPB. On June 4, CFPB Director Richard Cordray issued a decision in the first appeal of a Bureau administrative enforcement proceeding. The director’s decision concluded that PHH Corp., a mortgage lender, illegally referred consumers to mortgage insurers in exchange for kickbacks.

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