Restitution of approximately $2.8 million was ordered to be paid by a Kansas bank for deceptive residential mortgage practices, the Federal Reserve said Tuesday.
The restitution order, levied against Peoples Bank of Lawrence, Kansas, the Fed said, resulted from the bank’s practice of telling certain borrowers that they were paying an additional amount for discount points that would lower their interest rates.
In fact, the Fed said, many borrowers did not receive a reduced rate.
Under a consent order issued against the bank, the $2.8 million will be paid into an account to provide restitution to the borrowers. In addition, the bank will be required to refund all payments for discount points that did not reduce borrowers’ interest rates, and avoid violations of section 5 of the Federal Trade Commission Act in the future (the provision the Fed said the bank violated).
“The deceptive practices at issue were centered within Peoples’ national mortgage business, which is in the process of being wound down,” the Fed said in a release.