{"id":36688,"date":"2023-03-07T16:55:31","date_gmt":"2023-03-07T21:55:31","guid":{"rendered":"https:\/\/d56fg8tfg.fitnews.club\/finance\/cfpb-takes-action-against-franklin-loan-corporation-for-steering-consumers-into-costlier-mortgages\/"},"modified":"2023-03-07T16:55:31","modified_gmt":"2023-03-07T21:55:31","slug":"cfpb-takes-action-against-franklin-loan-corporation-for-steering-consumers-into-costlier-mortgages","status":"publish","type":"post","link":"https:\/\/d56fg8tfg.fitnews.club\/finance\/cfpb-takes-action-against-franklin-loan-corporation-for-steering-consumers-into-costlier-mortgages\/","title":{"rendered":"CFPB Takes Action Against Franklin Loan Corporation for Steering Consumers into Costlier Mortgages"},"content":{"rendered":"
Company to Pay $730,000 to Consumers Harmed by Illegal Bonus Program<\/em><\/strong><\/p>\n WASHINGTON, D.C. \u2014 <\/strong>Today, the Consumer Financial Protection Bureau (CFPB) ordered a California mortgage lender, Franklin Loan Corporation, to pay $730,000 for giving its employees illegal bonuses for steering consumers into loans with higher interest rates. The Bureau has asked a federal district court to approve a consent order requiring the company to end its illegal compensation system and refund the consumers it harmed.<\/p>\n \u201cToday\u2019s action will put $730,000 back in the pockets of consumers who may have never suspected that they had been harmed,\u201d said CFPB Director Richard Cordray. \u201cPaying bonuses for steering borrowers into more expensive loans violates their trust and is against the law.\u201d<\/p>\n Franklin Loan is a residential mortgage lender with 18 locations across Southern California and one in Chicago. Franklin Loan originated approximately $887 million in loans between 2011 and 2013. From June 2011 to October 2013, Franklin Loan paid at least $730,000 in quarterly bonuses to 32 loan officers based in part on the interest rates on the loans they provided to borrowers; the higher the interest rate of the loans closed during the quarter, the higher the loan officer\u2019s quarterly bonus.<\/p>\n The CFPB found that these bonus payments violated the Federal Reserve Board\u2019s Loan Originator Compensation Rule, which the Bureau has enforced since July 21, 2011. The rule prohibits mortgage lenders from paying loan officers based on loan terms such as interest rate. Franklin Loan violated the rule by tying its loan officers\u2019 quarterly bonuses to the interest rates on the loans they offered to borrowers. Franklin Loan\u2019s unlawful bonus practices affected more than 1,400 borrowers.<\/p>\n Today\u2019s consent order will ensure that all affected consumers are repaid and that no more consumers are harmed by the illegal compensation system. Franklin Loan has agreed to end its practice of incentivizing loan officers to upcharge consumers by paying quarterly bonuses based, in part, on the interest rates of loans they originated. Franklin Loan will also pay $730,000 in redress to affected consumers. The CFPB did not seek a civil penalty based on Franklin\u2019s financial condition and the Bureau\u2019s desire to maximize relief directly from Franklin Loan to affected consumers.<\/p>\n A copy of the CFPB\u2019s complaint is available here: https:\/\/files.consumerfinance.gov\/f\/201411_cfpb_complaint-for-permanent-injunction-and-other-relief_franklin-loan.pdf<\/span>