CFPB hits lender for lies about government affiliation

by Ryan Smith09 Apr 2015
The Consumer Financial Protection Bureau has ordered a mortgage lender to pay $250,000 for deceiving borrowers.

The CFPB took action today against RMK Financial Corporation for deceptive mortgage practices. According to the agency, those practices included advertising that led consumers to believe RMK was affiliated with the government. The CFPB has ordered the company to end those practices and pay a civil penalty of $250,000.

“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. “Today’s action sends a clear message that misleading consumers is illegal, unacceptable, and will not be tolerated.”

According to the CFPB, California-based RMK – which also does business under the name Majestic Home Loans – mailed print ads to more than 100,000 consumers in several states, using the names and logos of the Department of Veterans Affairs and the Federal Housing Administration in a way that implied the FHA or VA either sent the ads or endorsed the company’s products. Among the consumers who received the ads were “tens of thousands” of veterans and service members, according to the CFPB.

A typical advertisement for VA mortgages featured the VA seal and logo and described RMK’s loan products as part of a “distinctive program offered by the U.S. government.” The ad also instructed customers to call the “VA Interest Rate Reduction Department” at a phone number that actually belonged to RMK, according to the CFPB.

The ads also included misrepresentations about the loans’ interest rates and estimated monthly payments – including whether the interest rate was variable or fixed. Consumers who called RMK were sometimes given misleading information over the phone as well, according to the CFPB. In some cases, RMK employees implied or even said that the company was endorsed by the FHA or the VA.



Is TILA-RESPA a good or bad thing long term?