In November 2014, CFPB ordered Franklin Loan Corporation reimburse its customers the $730,000 it had given to 32 loan officers, “incentivizing” them to “guide customers into mortgages with higher interest rates.” The CFPB alleged Franklin Loan had violated “the Federal Reserve Board’s Loan Originator Compensation rule which prohibits tying a mortgage broker’s compensation to the terms of a loan.”

• A “residential mortgage lender with 18 locations across Southern California and one in Chicago,” Franklin Loan Corporation “operates primarily in California” and “originated roughly $887 million in loans between 2011 and 2013 and that more than 1,400 customers fell victim to the illegal practices.” [Ian McKendry, “CFPB Fines Franklin Loan for Ripping Off Customers”, American Banker, 11/14/14; Press Release, “CFPB Takes Action Against Franklin Loan Corporation for Steering Consumers into Costlier Mortgages”, Consumer Financial Protection Bureau, 11/13/14]

• In case 5:14-cv-02324, the CFPB “asked a federal district court to approve a consent order requiring the company to end its illegal compensation system and refund the consumers it harmed.” [Press Release, “CFPB Takes Action Against Franklin Loan Corporation for Steering Consumers into Costlier Mortgages”, Consumer Financial Protection Bureau, 11/13/14]

• “The Consumer Financial Protection Bureau slapped Franklin Loan Corporation with a $730,000 fine on Thursday for allegedly incentivizing loan officers to guide customers into mortgages with higher interest rates.” [Ian McKendry, “CFPB Fines Franklin Loan for Ripping Off Customers”, American Banker, 11/14/14]

• The court’s regulator stated that “Franklin Loan paid 32 loan officers at least $730,000 in quarterly bonuses between 2011 and 2013 and tied compensation to interest rates, rewarding employees for closing loans with higher rates.” These “unlawful bonus practices affected more than 1,400 borrowers.” [Ian McKendry, “CFPB Fines Franklin Loan for Ripping Off Customers”, American Banker, 11/14/14; Press Release, “CFPB Takes Action Against Franklin Loan Corporation for Steering Consumers into Costlier Mortgages”, Consumer Financial Protection Bureau, 11/13/14]