A consent order announced Monday between the consumer financial protection agency and a mortgage firm licensed in about 22 states imposes a $625,000 civil money penalty against the firm for deceptively advertising Veterans Administration (VA)-backed loans to military servicemembers and veterans.
The Consumer Financial Protection Bureau (CFPB) said the firm, ClearPath Lending, Inc., of California – which was not affiliated with the VA – engaged in the deceptive practices dating as far back as 2017. It’s the eighth such settlement announced by the agency since July concerning a mortgage firm sending deceptive ads targeting servicemembers and vets.
The bureau said ClearPath offers and provides VA-guaranteed mortgage loans, advertising the loans principally through direct-mail advertisements sent primarily to U.S. military servicemembers and vets. The bureau found that ClearPath sent consumers mailers for VA-guaranteed mortgages that contained false, misleading, and inaccurate statements – and created the false impression that ClearPath and the provider of the mortgage product was affiliated with the VA – 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.
Specifically, the CFPB said it found that ClearPath mailed advertisements that:
- contained false, misleading, and inaccurate statements or that failed to include required disclosures – for example, ads that 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;
- misleadingly advertised rates or payments as fixed, even though the advertised mortgage was an adjustable-rate mortgage or the payment was not fixed for the indicated duration.;
- misrepresented the existence, nature, or amount of cash or credit available to the consumer, and the existence or amount of fees or costs to the consumer, in connection with the advertised mortgage;
- failed to properly disclose, when required by Regulation Z, credit terms for the advertised mortgage, such as the number and time period of payments associated with the consumer’s repayment obligations over the full term of the loan;
- used the name of the consumer’s lender in a misleading way by not adequately disclosing ClearPath’s name and the fact it was not associated with, or acting on behalf of, the consumer’s current lender, as required by Regulation Z.
In addition to the penalty, the order imposes injunctive relief to prevent future violations.