The Consumer Financial Protection Bureau's crackdown on Castle & Cooke Mortgage is the first in what could be a string of enforcement actions against mortgage originators for failing to follow new loan officer compensation rules.

Last week, the CFPB filed a federal complaint against Castle & Cooke, a Salt Lake City-based mortgage bank, alleging it paid quarterly bonuses to loan originators who steered borrowers into higher-cost loans but did not have a written policy describing the bonuses. Nearly every post-mortem of the financial crisis has cited the mortgage industry's past practice of allowing commissioned loan officers and mortgage brokers to steer borrowers into higher-priced loans even if the customer would have qualified for a conventional lower-cost mortgage.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.