On August 26, 2020 the Consumer Financial Protection Bureau (CFPB) announced that it had entered into a consent order with a California-based mortgage lender, resolving allegations that the company violated the Consumer Financial Protection Act (CFPA) and Truth in Lending Act (TILA) by engaging in deceptive acts and practices with respect to its VA-guaranteed loan program.
The CFPB alleges that the company misrepresented various terms in its mailers to military service members and veterans including credit terms, payment amounts, and the existence and amount of fees and costs. For example, the company allegedly sent advertisements to 26,000 consumers in the fall of 2016 stating “No Out of Pocket Expenses” when in fact some of the products advertised resulted in out-of-pocket expenses. The CFPB alleged that the misrepresentations were likely to mislead consumers and affect their decisions with regard to obtaining a loan, in violation of the CFPA.
Additionally, the CFPB alleged that the company violated TILA by failing to disclosure consumers’ repayment obligations over the full term of the loan. For instance, mailers listed a monthly payment amount based on a fixed interest rate that only applied for a fixed-rate period of the loan but failed to provide the higher monthly rates that would apply during the variable rate period of the loan.
Under the terms of the consent order the company agreed to pay a civil money penalty of $260,000.