A federal court has been asked to impose monetary penalties – $268,869 in redress to consumers plus a civil money penalty (CMP) of $260,000 – against a Nevada-based nonbank mortgage company that reportedly misled veterans about the costs of proposed mortgage refinancings, according to filings Tuesday by the consumer financial protection agency.
The Bureau of Consumer Financial Protection (BCFP, formerly known as CFPB) on Tuesday filed a complaint in the U.S. District Court for the District of Nevada regarding “deceptive acts and practices” of Village Capital & Investment LLC, a non-bank mortgage company headquartered in Henderson, Nev. The bureau and Village Capital also filed a stipulated final judgment and order to resolve the claim.
According to the complaint, Village Capital, with 10 branches in 10 states and a loan portfolio of about 28,000 mortgages, in March 2017 hired a team of loan officers to staff a new office in San Antonio, Texas, with the primary responsibility of generating loans through in-home visits to veterans. Between March 2017 and August 2018, the complaint says, the San Antonio office employed five loan officers responsible for in-home sales presentations to veterans to induce them to refinance their loans.
According to the complaint, the Excel spreadsheets provided to loan officers to show the benefits of refinancing utilized “flawed” formulas, so the worksheets loan officers used misrepresented potential cost savings by: (1) inflating the future amount of principal owed under the existing mortgage by underestimating the proportion of the consumer’s existing monthly payment that is applied to principal; (2) underestimating the future amount of the refinanced mortgage’s monthly payments by overestimating the loan’s term; and (3) overestimating the total monthly benefit of the loan after the first month.
In the stipulation order, Village Capital “neither admits nor denies any allegations” of the complaint. The order says that, among other things, the firm must, within 30 days of the effective date, reserve or deposit into a segregated deposit account $268,869 for the purpose of providing redress to affected consumers (the order does not say how many consumers are affected); and submit a comprehensive written plan for providing that redress. As for the CMP, Village Capital would be required to pay the first $130,000 within 30 days of the effective date of the order and another $130,000 within 60 days of that date.