A federal judge here in California recently denied a mortgage company’s attempt to dismiss two counts of a class action suit against it. The company, Castle & Cooke Mortgage, argued that the consumers in those two counts had already obtained redress under a consent order the company entered into with the Consumer Financial Protection Bureau (CFPB) back in 2013. The consent order settled the CFPB’s charges that Castle had violated the Regulation Z loan originator compensation rule. The amended complaint in the class action alleged TILA violations, violations of various Utah laws including an unjust enrichment claim, and, with regards to the California subclass, violations of our Unfair Competition Law (UCL).
What the Class Action is About
The main allegation in the underlying lawsuit is that Castle broke the law by implementing a secret bonus program which gave its loan officers incentives to put borrowers in loans with higher interest rates. Castle sought to dismiss the unjust enrichment claims and the California UCL claims. The trial court denied that request. In 2013 the CFPB sued Castle for maintaining this bonus program, and later that year Castle entered into a consent agreement under which it agreed to pay millions of dollars in restitution and penalties. The named plaintiff in this lawsuit received a restitution check as a result of the consent agreement. However, the consent agreement did not limit or affect borrowers’ rights to pursue their own claims against Castle.