Arkansas bank faces penalty for accusation of misrepresenting refinancing loans to veterans

An Arkansas bank was ordered to pay a civil money penalty (CMP) of nearly $130,000 in October for its part in allegedly misrepresenting refinancing loans to veterans, according to enforcement actions for that month released Friday by the federal insurer of bank deposits.

The Bank of England of England, Ark., according to the Federal Deposit Insurance Corp., charged that the bank violated Section 5 of the Federal Trade Commission Act (unfair or deceptive acts or practices) by bank loan officers located in the Bloomfield, Mich., loan production office. According to the FDIC, the loan officers misrepresented to consumers “that Veterans Administration (‘VA’) refinance loan terms were available when they were not.

“The Bank’s misrepresentations at the Bloomfield Michigan LPO regarding terms for VA refinancing loans were deceptive, in violation of Section 5,” according to the FDIC order.

The total CMP is $129,800.

The bank is also barred from seeking or accepting indemnification from any third party for the CMP assessed and paid under the order, according to FDIC.

In other October actions released publicly Friday, the FDIC said it issued a consent order against Herring Bank of Amarillo, Texas, for unsafe and unsound banking practices – including weaknesses in board and management oversight, capital, and liquidity.

In addition to agreeing to a plan to strengthen its board (with an external director, among other things) and management, as well as asset/liability management and developing a capital maintenance plan, the bank is also restricted from declaring a cash dividend without prior written consent of federal and state regulators.

FDIC Makes Public October Enforcement Actions