On September 14, 2020, the Consumer Financial Protection Bureau (“CFPB”) announced that it had entered into a consent order with a mortgage broker and lender that advertises and offers mortgage loans guaranteed by the United States Department of Veterans Affairs (VA) through direct-mail advertisements sent primarily to United States military servicemembers and veterans. The CFPB alleged that the lender sent consumers mailers for VA-guaranteed mortgages that contained false, misleading, and inaccurate statements or that 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.
For example, the CFPB said that the lender’s 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, including misrepresenting the annual percentage rate applicable to the advertised mortgage. The CFPB also found that the advertisements created the false impression that the lender was affiliated with the VA. The advertisements also failed to properly disclose certain required credit terms, such as the number and time period of payments associated with the consumer’s repayment obligations over the full term of the loan.
The consent order requires the lender to pay a civil penalty of $625,000, and imposes injunctive relief to prevent future violations.