Steering Consumers to Higher Interest Rates Costs Mortgage Company $19 Million

CFPB Orders RPM Mortgage to Pay $19 Million for Steering Consumers Into Costlier Mortgages

Steering Consumers

It appears that mortgage companies and loan officers still do not grasp the full extent of the Consumer Financial Protection Bureau’s (CFPB) effort to protect consumers from higher loan costs from steering consumers into higher interest rates. The CFPB announced today new fines for RPM Mortgage. The CFPB revised the Loan Officer Compensation Rule and it went into effect July 21, 2011. It was very clear that a Mortgage Loan Officer could not increase their compensation by charging a borrower a higher interest rate. It appears that RPM Mortgage got creative in its efforts to get around the rule. First, they created a separate account for each loan officer to put the “profits” into. Second, the loan officer then used these “profits” to increase their income, cover short falls and pay marketing expenses. All of these acts are violations of the rules prohibiting bonuses to loan officers for steering business to higher interest rates.

Erwin Robert Hirt, the CEO of the company, was held personally liable for those acts as well. Pretty clear the CFPB is very serious about protecting the consumer. Hirt and RPM will pay $1 million each to the Penalty fund and RPM to pay $18 Million in redress to these consumers whose loans were affected by this practice. If you were a borrower and customer of RPM, you may be owed redress. Reach out to the CFPB as soon as possible.

The message to loan officers is pretty clear. The Loan Officer Compensation Rule is clear that a mortgage loan officer must set their commission rate and cannot affect their commission by steering a consumer into other loans or interest rates. They must make the same commission rate on all loans regardless of program or interest rate. Creative efforts to avoid the rule will just result in ever increasing fines.

Technically, violations of this rule and Consumer Financial Protection Act (CFPA) are grounds for removal from the National Mortgage Licensing System. In addition, California would withdraw their individual mortgage loan officer licensing.

If you are a consumer and are having issues with your mortgage or feel that you were damaged in some way by acts of your lender, contact us to set up a consultation to discuss your legal rights.

About Kevin Hardin

Kevin W. Hardin is a 22 year veteran of the Mortgage and Real Estate industries. He holds a Juris Doctor (JD) degree from Concord Law School and a CMB (Certified Mortgage Banker) from the Mortgage Bankers Association. He is a Senior Loan Officer at HomeStreet Bank. He works with Borrowers, Attorneys, Title Companies, Real Estate Agents and Mortgage Companies on mortgage law issues.


  1. I don’t get it. If it doesn’t follow the Constitution, how can it be done? If this “recess atmpinpoent” was made when the Senate was not in recess, how can it stand? What’s the use of having a Constitution if no one is being held to it? Should there be a lawsuit? Should the appointed person simply not be recognized? Should the agency’s funding be withheld? I just don’t get it! If it’s blatantly unConstitutional, it shouldn’t be allowed to happen! How do we nullify this?

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