Three banks assessed penalties in October, including one for deceptive practices in loan rebate

Three banks paid civil money penalties (CMPs) in October for a variety of shortcomings, including deceptive practices related to loan repayments, the federal insurer of bank deposits said Friday.

In a release detailing enforcement orders made public this month, the Federal Deposit Insurance Corp. (FDIC) said Transportation Alliance Bank, Inc. of Ogden, Utah paid a CMP of $315,000 for “engaging in deceptive practices related to charging consumers who paid the full loan balance in the first 90 days of the loan a rebate processing fee up to $40 calculated as a function of accrued interest.”

The FDIC said the borrowers were charged the fee even though Transportation Alliance’s marketing material promoted “no interest” and a “full interest rebate” if they repaid the loan in full during this 90-day promotional period.

The bank consented to payment of the CMP.

The other banks paying penalties were:

  • Paramount Bank of Hazelwood, Mo., $85,000 for violations of the Home Mortgage Disclosure Act (HMDA) by reporting inaccurate data about its mortgage transactions for 2020 and 2021.
  • Range Bank of Marquette, Mich., $4,000 for flood insurance coverage deficiencies on four loans. (Specifically, on loans secured by property located in a flood hazard area in which flood insurance has been made available under the National Flood Insurance Act, over failure to require the escrow of all premiums and fees for required flood insurance when it required the escrow of taxes, insurance premiums, fees, or any other charges for a loan secured by residential improved real estate.)

Both banks also consented to the penalty payments.

The FDIC also reported two removal/prohibition orders and three cease and desist orders to bank employees and banks.

FDIC Enforcement Decisions and Orders announced in November, 2023