Fairway agrees to financial penalty over unlicensed LOs

Fairway Independent Mortgage Corp. agreed to resolve alleged violations surrounding unlicensed lending activity that occurred at one of its California branches earlier this decade and pay $160,000 in penalties. 

In 2021 and 2022, unlicensed branch employees were alleged to have conducted origination activity that was only permitted to be carried out by licensed loan officers at the location. The actions ran afoul of both state financing law and the California Residential Mortgage Lending Act. 

Upon discovery, Fairway took immediate action and steps to ensure future compliance, according to a consent order agreement, which was signed on the final day of 2025 by leaders from both the California Department of Financial Protection and Innovation and the lender. 

"The California branch and branch manager are no longer associated with Fairway as of 2022. Fairway has since taken steps to enhance its oversight of unlicensed employees," the legal filing stated. 

The Madison, Wisconsin-based company, which rebranded last year to Fairway Home Mortgage, declined to comment on the agreement. California DFPI noted the lender had "fully cooperated" with the investigation. 

Signing of a consent order represents neither an admission nor denial of the findings, the department further said.   

Fairway to conduct its own compliance audit

In addition to the $160,000 administrative penalty, Fairway also agreed to conduct at its own expense an independent audit early this year to uncover any other potential instances of unlicensed activity that may have occurred between 2023 and 2025. 

Any findings of noncompliance with licensing regulations will result in further administrative penalties of $500 per employee who engaged in mortgage loan originator activity, per terms of the agreement. 

Fairway will deliver the full report from the independent audit to California officials by the end of the second quarter. 

The spotlight on state oversight

The Fairway order marks at least the second example of state regulators issuing penalties on mortgage companies for noncompliance with loan-officer licensing requirements in recent months. 

In September, banking officials from four states fined Southern California-based brokerage E Mortgage Capital $669,000 after they found unlicensed origination activity performed on at least 50 different occasions. 

Regulators in Idaho and Texas also claimed E Mortgage had used ineligible individuals to conduct loan processing tasks. 

As federal banking regulations ease in the second Trump administration, which has also seen the rescission of prior penalties and issued orders, eyes in the mortgage industry continue to look at the role of state governments in regard to the direction of potential future rulemaking and enforcement actions.

Both Illinois and New York introduced new consumer protection laws last year in the wake of Trump administration rollbacks.