Regulators and Agencies
THE CFPB’S SWEEP OF INVESTIGATIONS RELATED TO VA-GUARANTEED MORTGAGE ADVERTISEMENTS By Troy Garris, Garris Horn LLP
O
n September 19, 2020, the Consumer Financial Protections Bureau (CFPB) published a press release citing a newly issued consent order to a mortgage broker/lender, the eighth delivered by the Bureau in under two months related to deceptive loan advertisements sent to servicemembers and veterans. The series of investigations is in response to concerns about potentially unlawful advertising in the market that the VA identified. In each instance, the principal means of advertising VA-guaranteed loans is through direct-mail advertisements sent primarily to United States military servicemembers and veterans. The Bureau found that these companies mailed consumers advertisements for VA-guaranteed mortgages that contained false, misleading, and inaccurate statements or lacked required disclosures, in violation of the Consumer Financial Protection Act’s (CFPA) prohibition against deceptive acts and practices, the Mortgage Acts and Practices – Advertising Rule (MAP Rule), and Regulation Z. The consent orders require the companies to pay civil money penalties and impose requirements to prevent future violations, such as “bolster their compliance functions by designating an advertising compliance official who must review their mortgage advertisements for compliance
The MORTGAGE BANKER Magazine
with mortgage advertising laws prior to their use; prohibiting misrepresentations similar to those identified by the Bureau; and requiring the companies to comply with certain enhanced disclosure requirements to prevent them from making future misrepresentations.” Further details regarding the eight actions are as follows, including civil money penalties:
JULY 24, 2020: CA LICENSED MORTGAGE BROKER/LENDER $460,000 • Advertisements misrepresented the credit terms of the advertised mortgage loan by stating credit terms that the company was not actually prepared to offer to the consumer. • Advertisements misleadingly described an advertised introductory interest rate as a “fixed” rate, when in fact the rate was adjustable and could increase over time. • Advertisements created the false impression that they were affiliated with the government by using words, phrases, images, or designs that are associated with the VA or the Internal Revenue Service. • Advertisements used the name of the consumer’s lender in a misleading way by not adequately disclosing their own names
12
November 2020
