This past summer, a lawsuit was filed alleging that a Utah real estate mortgage lender had broken a federal rule that prevents companies from awarding bonuses to sales staff who direct home buyers into purchasing more expensive mortgages. In other words, sketch business practices. But now a settlement has been reached and it looks like these guys are going to be paying out the nose.
According to The Salt Lake Tribune, Castle & Cooke Mortgage LLC would write checks to its salespeople for bonuses based on the interest rates of the mortgages they sold. So basically, the higher the mortgage they sell, the more money they get in a bonus check. That’s kind of shady just by itself, but it’s especially bad considering the federal government passed a rule two years ago that very clearly said you couldn’t do that anymore. Coercing home buyers into getting mortgages they can’t afford is what led to the housing bubble burst back in 2007, after all, so the less you encourage that kind of behavior, the better for all of us.
“Our action has put an end to illegal steering of consumers and has put more than $9 million back in their pockets,” Richard Cordray, director of the Consumer Financial Protection Bureau, told the press. “This outcome embodies our mission – to root out bad practices from the marketplace and ensure consumers are being treated fairly.”
For their little legal snafu, Castle & Cooke will have to pay back a steep $13.2 million in refunds to their borrowers. Rough.
At Muve Real Estate, we treat all of our customers, whether first time buyers or experienced investors, with equal levels of respect and assurance. Our business is helping you find local houses for sale perfectly suited to your financial wants and needs.
