Castle & Cooke Mortgage to pay $13 million to settle federal complaint

Castle & Cooke Mortgage LLC has agreed to a pay a $13 million penalty for allegedly steering consumers into costlier mortgages under an agreement reached with the federal Consumer Financial Protection Bureau.

The Salt Lake City-based company does business in 22 states, including Nevada. The agency has asked a federal court to approve the consent order that would provide $9 million in restitution for consumers and a $4 million penalty against the firm and two of its officers for allegedly paying loan officers illegal bonuses.

“Our action has put an end to illegal steering of consumers and has put more than $9 million back in their pockets,” CFPB Director Richard Cordray said Thursday.

Under the order, Castle & Cooke Mortgage, its President Matthew Pineda, and Senior Vice President of Capital Markets Buck Hawkins admitted no wrongdoing.

“With today’s resolution we are pleased that we can now focus our undivided attention on our core mission: extending high quality loans and superior service to borrower,” the company said in a statement. “The regulations are complex, but we are committed to legal and regulatory compliance in our lending.”

Among Castle & Cooke’s 45 branches are two in Las Vegas, one at 6900 Westcliff Dr., while the other is at 5888 W. Sunset Road. The mortgage company employs 330 people and originated about $1.3 billion in loans in 2012.

On July 23, the CFPB filed a 10-page complaint in federal district court in Salt Lake City against the mortgage company and two of its officers for allegedly paying illegal bonuses to loan officers who steered consumers into mortgages with higher interest rates.

The complaint alleged the company and two of its officers violated the Federal Reserve Board’s loan originator compensation rule by paying loan officers quarterly bonuses that varied based on the interest rate of loans they offered to borrower.

The rule banned compensation based on loan terms such as the interest rate of the loan. The CFPB estimates that more than 1,100 quarterly bonuses were paid to over 215 Castle & Cooke loan officers.

According to the consent order, Castle & Cooke will pay $9.23 million to consumers. The consent order still needs to be approved by a federal judge.

Any borrower who obtained a home loan since April 6,2011, and whose loan officer received a quarterly bonus for that loan, will receive a check. The CFPB estimates more than 9,400 consumers will receive checks for approximately $982.22.

Contact reporter Chris Sieroty at csieroty@reviewjournal.com or 702-477-3893. Follow @sierotyfeatures on Twitter.