The CFPB has announced the settlement of an enforcement action against a California-based mortgage lender for alleged deceptive advertising practices, including the use of advertisements that the CFPB claimed falsely led consumers to believe that the company was affiliated with the U.S. government. The consent order requires the lender to pay a civil penalty of $250,000.
The lender was alleged to have sent direct mail advertisements to military servicemembers and veterans containing the names and logos of the Department of Veterans Affairs and the Federal Housing Administration in a way that falsely implied that the advertisements were sent by the VA or FHA, or that the advertised mortgage products were endorsed or sponsored by the VA or FHA. The CFPB also alleged that the lender’s advertisements failed to satisfy TILA requirements for advertising variable rate loans and misrepresented interest rates and estimated monthly payments, such as by misleading consumers to believe advertisements were for fixed-rate rather than variable-rate loans.
The CFPB charged the lender with violations of TILA, the CFPA, and Regulation N (the Mortgage Acts and Practices Advertising Rule). Regulation N bars material misrepresentations about the terms of a mortgage product in a commercial communication, including misrepresentations regard the relationship between a credit provider and a government.
In addition to ordering the lender to pay the $250,000 civil penalty and no longer engage in the alleged unlawful practices, the consent order imposes reporting and recordkeeping requirements on the lender.
Earlier this year, the CFPB announced enforcement actions against three mortgage companies for alleged violations of Regulation N resulting from the companies’ alleged wrongful depiction of their affiliation with the U.S. government in direct mail advertisements. Two of the actions were settled through consent orders requiring payments of civil penalties of $225,000 and $85,000.