CFPB settles with three other lenders on deceptive VA advertising
Recently, the CFPB announced regulations (see here, here, and here) with three mortgage lenders for posting advertisements for Veterans Affairs (VA) mortgages to consumers that allegedly contained misleading statements or did not have the required disclosures. According to the Bureau, lenders offer and provide VA guaranteed mortgages and allegedly sent false, misleading and inaccurate direct mail advertisements to military personnel and veterans in violation of CFPA, mortgage laws and practices – Advertising rule (rule MAP) and Regulation Z. Among other things, the Bureau alleges that the advertisements (i) did not include the required disclosures; (ii) stated credit terms that lenders were unwilling to offer; (iii) makes “false representations about the existence, nature or amount of liquidity available to the consumer in connection with the mortgage loan product”; and (iv) gave the false impression that the lenders were affiliated with the government. Two of the lenders also allegedly used the name of the consumer’s current lender in a misleading manner and made a false claim that consumers would receive specific repayment amounts from escrow if they refinanced their mortgages, even though the amounts advertised. “Were calculated using a methodology that had no impact on the actual escrow repayment amount,” and consumers were often required to fund new escrow accounts when new loans were generated.
In addition, one of the lender’s advertisements told consumers that they could “”[s]”miss two payments” or “miss” two payments when refinancing with the company “but failed to disclose, among other things, that the missed or missed payments would be added to the principal balance of the loan.
Consent orders (see here, here and here) impose bans on future advertising misrepresentation similar to those identified by the Bureau, require lenders to use a compliance officer to review mortgage advertisements for compliance with consumer protection laws and require compliance with certain improved disclosure requirements. The Bureau also imposes civil penalties of $ 225,000, $ 50,000 and $ 230,000 respectively against lenders.
The latest enforcement actions are part of the bureau’s “line of investigations” into misleading advertising on VA mortgages. In August and July, the Bureau issued consent orders against four other mortgage lenders for similar violations, covered by InfoBytes here and here.