Lenders have been struggling for some time with convincing business partners and employees that the Consumer Financial Protection Bureau’s reach can and will extend to them. The latest case is an illustration for any doubters that the CFPB is entirely serious in its intentions to bring the full weight of its powers against individuals and businesses alike. Hence, compliance is a legitimate concern for all — not just for business owners.
Over the course of the last 12 months, the Consumer Financial Protection Bureau has repeatedly demonstrated its willingness to target enforcement against individuals — including loan officers. In most cases, the enforcement against individuals is connected to an enforcement action against a company. Officers and owners of companies have frequently been targeted when their actions directly contributed to, or permitted the continuance of, violations. Further, loan officers who were alleged to have been involved in a scheme to receive marketing benefits in exchange for title referrals received fines and industry suspensions.
However, recently, the CFPB issued a consent decree against only a loan officer, whoallegedly engaged in a mortgage fee shifting scheme where in exchange for the referral of business, the escrow agent shifted fees at the loan officer’s request to assist him in increasing his volume of business. The CFPB required the payment of an $85,000 fine and suspended the loan officer from employment in the industry for one year. Unlike many of the prior consent decrees in which individual enforcement was coupled with actions against an entity, in this case the consent decree was targeted only against the loan officer.
This does not mean the CFPB would not enforce a violation against an entity in a similar situation in the future. Business owners, companies and individuals need to remain vigilant about compliance.
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