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CSBS Announces $5.2 Million Multi-State Enforcement Action Against Maryland-Based Mortgage Lender To Resolve Allegations Of Misconduct Relating To Continuing Education And Testing Of Mortgage Loan Originators

Enforcement CSBS

Consumer Finance

On April 13, the Conference of State Bank Supervisors (“CSBS”) announced a settlement agreement and consent order following a coordinated enforcement action launched by 43 states against a non-bank mortgage lender after finding that the lender’s mortgage professionals shared test information from mandatory compliance examinations and the lender’s compliance staff routinely completed continuing education and examination requirements for other employees. The case developed after state financial regulators in New Hampshire and Maryland discovered the misconduct and reported it to the Multi-State Mortgage Committee (“MMC”)—a group composed of state regulators charged with supervising mortgage lenders that operate in multiple states—which opened an investigation. Joined by 41 other states, the settlement agreement also found that many of the lender’s employees dishonestly completed continuing education requirements for other employees, including the mortgage lender’s chief executive officer and chief operating officer. The settlement agreement and consent order issued by the MMC for the breach of these duties included the imposition of a $5.2 million fine and commanded the removal and replacement of the lender’s chief operating officer. The agreement also ordered the lender to (i) prepare a comprehensive plan of improved corporate governance policies approved by the lender’s parent’s board of directors within 270 days, with a follow-up reported to the MMC on implementation of the plan required 270 days later, and (ii) hire an independent auditor to evaluate the lender’s training and education program. The same mortgage lender was also subject to a different and unrelated enforcement action in February 2015. The CFPB recently imposed a $2 million penalty against the lender for deceptive marketing practices and paying kickbacks to customer referrals.

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