Mortgage Company Sued for Giving Bonuses to Employees who Steered Homeowners to Bad Deals
The Consumer Financial Protection Bureau (CFPB) has sued a billion-dollar mortgage company for rewarding its employees when they convinced homeowners to accept bad deals.
Utah-based Castle & Cooke Mortgage was accused in federal court of paying out $4 million in bonuses to loan officers for steering consumers into unfavorable mortgages.
The litigation represents the first time that CFPB has gone after a financial institution for this kind of business practice, which was common before the financial crisis last decade.
Daniel Wagner at The Center for Public Integrity wrote that Castle & Cooke violated a federal prohibition on paying loan officers more when they sell loans with higher interest rates and fees.
“Before the ban … the company paid employees kickbacks for pushing higher-rate mortgages – ‘the higher the interest rates, the higher the loan officers’ commissions,’” Wagner wrote.
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