Ari Karen, writing in National Mortgage News  reports a consent order that the Consumer Financial Protection Bureau (CFPB) has entered into a consent decree with Franklin Loan Corporation. The decree mandates the company to pay $730,000 in fines, based upon the allegation that Franklin improperly paid 32 loan officers bonuses. A civil lawsuit may follow. Plus 5 years of reporting to any person reporting to the company whose duties are impacted by the decree is part of the agreement.

Karen told MHProNews that, “If in fact these allegations are accurate, it is not surprising that regulators found such a compensation plan to violate the LO comp rules. Whether paid as arrears or paid as expenses, compensation that is predicated on the terms of loans is unlawful. What may surprise many lenders, however, is that Franklin is not a massive company. Indeed, the violation in question involved fewer than 40 loan officers.”

Karen elaborated, saying: “Hence, the myth that smaller companies do not need to worry about the CFPB and/or compliance is once again proven wrong. Once again, there is also proof a lender cannot outsmart the agency through inaccurate titles and/or “bonuses.””

Industry in Focus  shared a manufactured housing focused report on the CFPB’s 2014 rules, including the LO Comp rule, which is available free to industry professionals, linked here. ##

(Image credit: 401k2012FlickrCreativeCommons and MHProNews)