Guarantee Mortgage Corp., which operated 10 branches in the San Francisco Bay Area, will pay a civil penalty of $228,000 for violating the Loan Originator Compensation Rule, the Consumer Financial Protection Bureau (CFPB) announced.
The now-defunct company is accused of paying its branch managers based, in part, on the interest rates of the loans they closed, the CFPB says in a release.
A bureau investigation found that Guarantee had, in fact, been paying its loan originators partly based on the interest rates charged on loans they had originated, thus providing them with an incentive to sell higher-interest-rate loans to consumers.