The Cheshire Mortgage Corporation has been slapped with a £1.225m fine for unfair treatment of customers.
The Cheadle-based lender may also be forced to hand back £2m to about 2,000 customers adversely affected between 2004 and 2009.
The company targeted customers with poor credit histories but the Financial Services Authority said it failed to treat some customers fairly when they fell into arrears, was unable to always demonstrate that mortgages it sold were affordable, and did not always communicate regularly or fully with its customers.
CEO Henry Moser was fined £70,000 and has agreed to step down from his role within three to six months after the FSA said he failed to ensure the firm was being properly managed.
Compliance director, Andrew Lawton, was fined £13,500 and banned from holding a similar role.
Tracey McDermott, left, of the FSA, said: "Some customers already worried about being able to pay back their mortgages were put under undue pressure and sometimes ended up paying more than they should."
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