Seattle bank slapped with $1.35 million penalty for RESPA violations

OK bank, short on capital, faces prompt corrective action

A civil money penalty (CMP) of $1.35 million assessed against a Seattle bank was among the enforcement actions and orders taken in November by the federal insurer of bank deposits, the agency said Dec. 27.

In an order, the Federal Deposit Insurance Corp. (FDIC) said Homestreet Bank consented to pay the CMP after the agency found that Homestreet, through the now discontinued Home Loan Center-based mortgage banking business line, violated Regulation X (rules implementing the Real Estate Settlement Procedures Act [RESPA]) by “entering into certain comarketing agreements using online platforms and desk rental agreements that resulted in the payment of fees to real estate brokers and home builders for their referrals of mortgage loan business.” The FDIC said all of the subject agreements have been terminated.

In other actions, the agency said it took prompt corrective action against an Oklahoma bank after determining the financial institution was significantly undercapitalized. The FDIC said Farmers Bank of Carnegie, Okla., as of Sept. 30, held a total capital ratio of 4.29%, with common equity tier 1 capital at 3.03% (as well as its tier 1 capitol ratio) and a leverage capital ratio of 2.22%

The FDIC said it has determined that the bank “has not demonstrated the ability to return the bank to a safe and sound condition,” leading the agency to take prompt corrective action against the bank.

Among other things, the bank is required to (within 45 days of Nov. 8, the date the order went into effect) increase its capital position to the FDIC’s “adequately capitalized” category, or tier 1 risk-based capital ratio of 6%. The bank may raise the capital by means including sale of common stock, sale of noncumulative perpetual preferred stock, or direct contribution of cash by board members or shareholders of the bank.

FDIC Makes Public November Enforcement Actions