Peoples Bank to return $2.8M to mortgagors
The Federal Reserve Board has issued a Consent Order against Peoples Bank, Lawrence, Kansas, for deceptive residential mortgage origination practices in violation of section 5 of the Federal Trade Commission Act. The Fed's press release said "Peoples told certain borrowers that they were paying an additional amount for discount points that would lower the borrowers' interest rate. In fact, many borrowers did not receive a reduced rate."
The Order requires Peoples to pay approximately $2.8 million into an account to provide restitution to the affected borrowers, who will receive refunds of all payments for discount points that did not reduce their interest rates. Peoples was also orders to avoid violations of the UDAP provisions of section 5 of the Federal Trade Commission Act in the future.