CFPB fines mortgage lender for 'illegal, deceptive' acts
April 9, 2015
WASHINGTON (4/10/15)--The Consumer Financial Protection Bureau (CFPB) Thursday ordered California mortgage lender RMK Financial Corp. to end its "illegal and deceptive" mortgage advertising practices and pay a civil penalty of $250,000.
The action stems from ads that led consumers to mistakenly believe that the California-based company was affiliated with the U.S. government, a violation of the Truth-in-Lending Act, the Mortgage Acts and Practices Advertising Rule and other federal consumer laws, said CFPB.
The company also does business as Majestic Home Loans.
CFPB said RMK mailed print advertisements to more than 100,000 consumers in several states, using the names and logos of the Department of Veterans Affairs (VA) and the Federal Housing Administration (FHA). The ads implied they were sent by the agencies or that the company or advertised products were endorsed or sponsored by them.
The company's ads featured the VA seal and logo at the top of the page and described the loans as part of a "distinctive program offered by the U.S. government." They instructed consumers to call the "VA Interest Rate Reduction Department," but the phone number was an RMK number. Some mailers were labeled "FHA Benefits" and included an image of the Statue of Liberty on the outside as well as warnings citing the U.S. Code and threatening fines and imprisonment for tampering with the letter.
The ads also contained misrepresentations about interest rates, estimated monthly payments and whether the rate was fixed or variable. Consumers who called the number were also given misleading information over the phone.
"Deceptive advertising has no place in the mortgage marketplace, and the Consumer Bureau will continue to take action against companies that mislead consumers with false claims of government affiliation," said CFPB Director Richard Cordray. He noted the action "sends a clear message that misleading consumers is illegal, unacceptable, and will not be tolerated."