In its latest enforcement action, the Consumer Financial Protection Bureau ordered Connecticut mortgage lender 1st Alliance Lending to pay an $83,000 civil money penalty for violating federal law by illegally splitting real estate settlement fees.

The lender self-reported the violations to the CFPB, admitted liability, and provided information related to the conduct of other actors that has facilitated other enforcement investigations.

“These types of illegal payments can harm consumers by driving up the costs of mortgage settlements,” said CFPB Director Richard Cordray.

“The Bureau will use its enforcement authority to ensure that these types of practices are halted. We will, however, also continue to take into account the self-reporting and cooperation of companies in determining how to resolve such matters,” Cordray continued.

First Alliance started using a hedge fund to finance its loans in 2010 and it split revenues and fees with affiliates of the hedge fund.

According to the report, “In 2011, First Alliance secured less-costly financing and ended its arrangement with the hedge fund and its affiliates. Although the hedge fund and its affiliates no longer financed First Alliance’s mortgages, First Alliance continued to split origination and loss-mitigation fees with them.”

As a result, the hedge-fund affiliates received payments from 83 First Alliance loans made between August 2011 and April 2012.

The lender first told the Bureau that it believed it had violated the Real Estate Settlement Procedures Act by paying these unearned fees.