Franklin Loan Corporation Reaches Settlement with Consumer Financial Protection Bureau
PALM DESERT, CA: Franklin Loan Corporation (FLC) announced today the settlement of an ongoing Consumer Financial Protection Bureau (CFPB) investigation initiated by the CFPB. In December of 2013, FLC was served with a Civil Investigative Demand (CID) on what the CFPB believed were inappropriate practices including loan officer compensation and affiliated business arrangements covering the period from January 1st, 2011 through December 18th, 2013. FLC has maintained from the beginning of the investigation that all of its business practices, without exception, were and are fully compliant with the law. Through the course of the investigation and with FLC’s assistance to the CFPB, items in the original demand were dropped during the almost yearlong investigation. Understanding the importance of the CFPB’s mandate to protect the consumer, FLC fully cooperated in every request made during the entire period.
At the conclusion of the investigation the CFPB informed FLC that unless a settlement could be reached (Consent Order), they intended to pursue a claim against FLC, based on the CFPB’s contention th at bonuses FLC had paid to its loan originators during the period of July 2011 through January 2013 did not conform to the Truth in Lending Act’s Loan Originator Compensation Rule (LO Comp Rule). FLC did, and still does, dispute this contention. FLC asserts there was no relationship between LO Comp and interest rates to consumers, and FLC is proud of the competitive costs and excellent customer service offered to its clients. Nevertheless, FLC concluded that the most economic option for it was to enter into the Consent Order rather than a protracted legal dispute that could go on indefinitely, taking time and resources away from the company’s core functions.
The Consent Order filed with the court contains no admission of wrongdoing of any kind by FLC and requires that the company pay the sum of $730,000 to the CFPB. Moreover, there was no finding of wrongdoing by any officer or principal of FLC or in its business relationships nor any findings that the company harmed consumers. While that is a significant sum of money, in the spectrum of CFPB Consent Orders it is actually relatively modest. Therefore it made good economic sense for FLC to agree to this Consent Order and conclude the matter.
“We are pleased to put this behind us,” stated Walter K. Neil, President and CEO of FLC. “While we believe that our compensation program was fully in compliance with the law and caused no harm to our clients, this Consent Order allows us to put the investigation to rest at an acceptable cost and remove any uncertainties going forward. We can now fully focus on the business of helping our clients get the high level of service they have come to expect from Franklin.”
FLC is pleased that this matter is resolved and that it’s now free to focus on its primary responsibility of serving the needs of its clients and partners and providing the excellent service it has built a reputation on for the past 25 years. FLC remains in strong financial health, with a growing presence in Southern California and a team of people second to none. This year, Franklin was named as one of the fastest growing privately held companies in America on the Inc. 5000. Franklin Loan Corporation is the largest independent mortgage banker in the Coachella Valley and has been serving the community for 25 years.