CFPB Issues $13M Consent Order for Utah Lender

The ""Consumer Financial Protection Bureau"":http://www.consumerfinance.gov/ (CFPB) took further action against a Utah-based mortgage lender for allegedly steering consumers into more expensive loans.

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The bureau announced it has issued a proposed ""consent order"":http://files.consumerfinance.gov/f/201311_cfpb_proposed-final-order_castle-cooke.pdf in its enforcement action against ""Castle & Cooke Mortgage, LLC"":http://www.castlecookemortgage.com/. Under the terms of the order, Castle & Cooke has agreed to pay more than $9.2 million in restitution to consumers and $4 million in civil penalties to settle allegations that two of its officers--president Matthew Pineda and SVP of capital markets Buck Hawkins--paid illegal bonuses to loan officers based on the interest rates of loans offered to borrowers.

CFPB estimates that the money paid toward consumer redress will reach more than 9,400 consumers.

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According to CFPB's ""initial complaint"":http://files.consumerfinance.gov/f/201307_cfpb_complaint_Castle-and-Cooke-Complaint.pdf filed in July this year, Pineda and Hawkins allegedly paid more than 500 bonuses to originators from July 2011--three months after the Loan Originator Compensation Rule went into place to prohibit such practices--through April 2012, with payments totaling more than $4 million.

In its most recent release, the bureau estimates that more than 1,100 quarterly bonuses were paid to more than 215 of the firm's loan officers.

In addition to paying consumers and the bureau, Castle & Cooke has agreed to end any unlawful compensation practices, such as those alleged in the complaint. The company has also agreed to abide by federal law that requires creditors to retain evidence of compliance with compensation rules.

In agreeing to the order, Castle & Cooke neither admitted nor denied the allegations set forth in the July complaint.

""Our action has put an end to illegal steering of consumers and has put more than $9 million back in their pockets,"" said CFPB Director Richard Cordray. ""This outcome embodies our mission--to root out bad practices from the marketplace and ensure consumers are being treated fairly.""

The consent order is not yet final and is awaiting approval from a federal district court.