The Consumer Financial Protection Bureau, on October 26, 2020, issued another consent order to a mortgage broker/lender - the ninth since July 2020 aimed at allegedly deceptive advertising.  The series of investigations is in response to the VA’s identified concerns about potentially unlawful advertising within the market. The Bureau has assessed more than $4.4 million in civil money penalties as a result of this sweep.

The principal means of advertising VA-guaranteed loans was through direct-mail advertisements sent primarily to United States military servicemembers and veterans.  The Bureau alleged that the advertisements for VA-guaranteed mortgages contained false, misleading, and inaccurate statements or lacked required disclosures, in violation of the Consumer Financial Protection Act, the Mortgage Acts and Practices – Advertising Rule, and Regulation Z.  

Allegations include:

·        Advertisements misrepresented credit terms by stating terms that the company was not actually prepared to offer to consumers, including misrepresenting the APR applicable to the advertised mortgage.

·        The company misrepresented the existence, nature, or amount of cash or credit available to consumers, and used misleading rhetorical questions, in connection with advertised mortgages.

·        Advertisements failed to properly disclose, when required by Regulation Z, credit terms for the advertised mortgages, such as the amount of each payment and time period of payments associated with consumers’ repayment obligations over the full term of the loan.

·        Advertisements misleadingly indicated that the mortgage products could help consumers eliminate debt.

·        The company made misleading comparisons involving actual or hypothetical loan terms in advertisements.

The company is required to pay $1.8 million in civil money penalties.  In addition, as typical, the consent order imposes ongoing future requirements to prevent further violations (e.g., designating an advertising compliance official to review advertisements prior to use, prohibiting misrepresentations, and requiring enhanced disclosure requirements).

See our blog post here for additional details on the eight similar consent orders previously issued.  For more information, contact Troy Garris at 301-461-8952 or troy@garrishorn.com.