With Slush Fund Crackdown, CFPB Gets Serious on Loan Officer Comp

For years, many have been asking when the Consumer Financial Protection Bureau was going to get aggressive when it comes to pursuing lenders it believes skirted the loan officer compensation rules.

It appears that time is now.

Two lenders recently have settled claims they violated the LO compensation laws.

RPM Mortgage has agreed to pay $18 million dollars to redress alleged violations, as well as an additional $1 million fine. Further, the lender's president also has agreed to pay a $1 million personal fine for his role in implementing a comp plan the CFPB claimed was illegal.

The company said it settled the matter without an admission of wrongdoing "to avoid the cost and distraction of litigation."

RPM's alleged violations center on its use of individual expense accounts which were funded by overages charged by the loan officers. The expense accounts could be used by loan officers to accommodate pricing concessions on future loans and, if not so used, could be paid as quarterly or monthly bonuses to loan officers.

A second lender, Guarantee Mortgage Corp., was fined $228,000 notwithstanding the fact that it was already in the process of dissolution.

GMC allegedly violated LO compensation laws by paying overages to marketing companies owned by branch managers and some originators, according to the CFPB. This company also settled without confirming or denying the allegations.

These settlements show not only that the CFPB is serious about pursuing LO comp enforcement at this time, but that it is willing to try to single out individuals, and pursue companies regardless of their status as a going concern.