East Hartford mortgage banker First Alliance Lending will pay the federal Consumer Financial Protection Bureau an $83,000 civil fine after the company discovered and reported improper payments to an affiliate of a former financial backer, the CFPB announced.
First Alliance ran afoul of the Real Estate Settlement Procedures Act when it split loan-settlement fees with affiliates of a hedge fund that had previously backed its loan purchases, the CFPB said.
The law bans a person from paying or receiving a portion or split of a fee that has not been earned in connection with a real estate settlement.
First Alliance, which primarily buys troubled mortgages and offers financing to borrowers, got backing from a hedge fund to purchase the loans in 2010 and 2011.
It continued to split fees with affiliates of the fund after the relationship ended.
There were 83 such transactions that violated the law.
CFPB Director Richard Cordray said in a statement that the payments can drive up the cost of mortgage settlements.
First Alliance reported the violations to the CFPB last year. The company admitted liability and provided information on the conduct of other parties to help enforcement investigations.
“We are pleased this matter has come to a conclusion,” David Ward, general counsel for First Alliance, said in a statement. “This agreement allows us to better focus resources on our core business – helping consumers avoid the loss of their home and providing them with sustainable home ownership through principal reduction and affordability.”
