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Mortgage Lender Self-Reports Violation to CFPB – Small Penalty Follows

The Consumer Financial Protection Bureau today announced that 1st Alliance Lending, LLC, a mortgage lender, was assessed a civil monetary penalty of $83,000, arising from illegally splitting real estate settlement fees.

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In Yes, the CFPB is Serious About Self-Reporting!, I commented last August that the bureau is encouraging regulated entities to self-report, even if unsure whether their conduct violates law. Previously, self-reporting by US Bank had led the CFPB to forgo imposing a civil money penalty against that institution.

While today’s announcement includes a civil monetary penalty, it is small compared to the tens of millions in penalties imposed by the bureau in prior enforcement actions. It also suggests that the CFPB was sincere when it suggested last August that self-reporting would allow for “a dialog” and engagement on what the appropriate result would be.

A copy of the consent order between the bureau and the mortgage lender is available here.

Update – 2/25/2014: You can read 1st Alliance Lending LLC’s press release here. According to the company’s press release, their self-reporting occurred before the CFPB issued Bulletin 2013-06 titled “Responsible Business Conduct: Self-Policing, Self-Reporting, Remediation and Cooperation.”

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Donald Maurice provides counsel to the financial services industry, successfully litigating matters in the state and federal courts in individual and class actions. He has successfully argued before the Third, Fourth and Eighth Circuit U.S. Courts of Appeals, and has represented the financial services industry before several courts including as counsel for amicus curiae before the United States Supreme Court. He counsels clients in regulatory actions before the CFPB, and other federal and state regulators and in the development and testing of debt collection compliance systems. Don is peer-rated AV by Martindale-Hubbell, the worldwide guide to lawyers. In addition to being a frequent speaker and author on consumer financial services law, he serves as legal counsel to DBA International and as chair of the ABA's Bankruptcy and Debt Collection Subcommittee. He serves on the governing Board of Regents of the American College of Consumer Financial Services Lawyers and on the Governing Committee of the Conference on Consumer Finance Law .