Regulatory action has been taken against a Midwest bank for charging discount points on mortgages without commensurately lowering the rates. The bank will wind down its national mortgage business.
Peoples Bank was established in 1871. Its headquarters is located in Lawrence Kansas, and it operates 12 locations in two states, according to the Federal Deposit Insurance Corp.
The 469-employee financial institution
operates a mortgage business. As of Sept. 30, there were $183 million in one-to-four family residential loans in People’s investment portfolio.
From January 2011 until March 2015, Peoples Bank charged discount points on mortgages, often for thousands of dollars, according to a consent order announced by the Federal Reserve Board of Governors on Tuesday.
While the points were shown on required disclosures, the Fed claims that many borrowers who paid discount points didn’t actually receive a reduced interest rate or got a rate that was not reduced commensurate with the price paid for the points.
The practices violated section 5 of the Federal Trade Commission Act.
The misleading practice was reportedly discontinued in March 2015.
Peoples Bank is required by the consent order to pay around $2.8 million in restitution to the impacted borrowers.
In October of last year, the Department of Housing and Urban Development reached a $5,000 settlement with Peoples Bank in Overland Park, Kansas, over issues on one loan insured by the Federal Housing Administration.
The parent of Peoples Bank, Peoples Inc., was acquired by National Bank Holdings Corp. As a result of the acquisition, it is shuttering its national mortgage business by the end of next month and laying off 62 Michigan employees.
