Arkansas bank with Michigan loan production office agrees to settlement of $1.5 million, worker enforcement actions

An Arkansas bank operating a loan production office in Michigan has agreed to a $1.5 million civil money penalty (CMP), and nine former employees of the bank have stipulated to individual enforcement actions, the federal bank deposit insurance agency said Friday.

The Federal Deposit Insurance Corp. (FDIC) said it reached a settlement with the Bank of England of England, Ark., for violations of Section 5 of the Federal Trade Commission Act (Section 5), the Real Estate Settlement Procedures Act (RESPA), the Fair Credit Reporting Act (FCRA), and the Home Mortgage Disclosure Act (HMDA).

The agency said the bank has stipulated to the issuance of an a CMP) of $1.5 million. Also, the FDIC said, nine former employees of the Bank of England have stipulated to individual enforcement actions.

“Based on the FDIC’s findings, the bank made $1.9 million in remediation to over 900 harmed consumers,” the agency said.

In February, the FDIC said it issued seven orders to pay CMPs – all assessed against workers at the Arkansas bank – totaling $275,500 for actions taken at a Michigan loan production office.

The penalties against the employees of the Arkansas bank were allegedly related to loans offered or made to veterans in 2019. Specifically, the FDIC alleged that workers were involved in a scheme in which loan officers misrepresented available loan prices for mortgage loans, that consumers could skip two months of their mortgage payments, and the bank’s loan production office’s affiliation with the U.S. Department of Veteran’s affairs. The loan production office was based in Bloomfield, Mich., the agency said.

Friday, the FDIC said it determined the bank entered into certain co-marketing arrangements and marketing service agreements in which the bank and real estate brokers agreed to market their services together using online platforms. Further, the FDIC said, the bank also entered into desk rental agreements whereby the bank rented space from realtors, and entered into agreements with online/digital platforms for lead generation.

“These arrangements and agreements resulted in the payment of fees by the bank to real estate brokers and online/digital platforms for their referrals of mortgage loan business, in violation of REPSA,” the FDIC said.

The agency said it also determined that the bank brokered certain reverse mortgage loans where broker fees made to the bank constituted things of value provided in return for loan referrals in violation of RESPA Section 8.

The FDIC also determined that the bank failed to provide consumers with firm offers of credit and required disclosures as required by the FCRA, and the bank failed to report accurate data on its 2021 loan application register in violation of HMDA.

FDIC Announces Settlement with an Arkansas Bank and Nine Former Employees for Violations of Consumer Protection Laws

Civil Money Penalty Against Bank of England, England, Arkansas