Deceptive advertising of mortgage lending fees cost KY bank $425,000 penalty

A civil money penalty (CMP) of $425,000 was assessed against a Kentucky bank and made public last month for deceptively advertising interest rates and fees for home mortgage loans, the federal insurer of bank deposits reported Friday.

According to the Federal Deposit Insurance Corp. (FDIC), Magnolia Bank of Magnolia, Ky., was assessed the CMP for the deceptive ads and fees, which it claimed were the “lowest on the market” and included a promise of a “best rate guarantee,” comparative shopping for such rates, and lower rates due to the bank’s fee structure.

The bank entered into a stipulation and consent to the issuance of the order to pay the CMP, the FDIC said.

The CMP against Magnolia was among 13 enforcement orders issued by the federal insurer of bank deposits in March, the agency said. The others were: five orders for approval of Section 19 applications (allowing individuals, once prohibited, the right to serve again at a federally insured financial institution); one voluntary termination of deposit insurance (for Oxford Bank & Trust of Oak Brook, Ill.); and six terminations of actions (for Farmers & Merchants Bank, Lakeland, Ga.; All American Bank, Des Plaines, Ill.; Integrity Bank, Fowler, Kans.; Mid City Bank, Inc., Omaha, Neb.; The Farmers Bank of Lynchburg, Lynchburg, Tenn.; and First Capital Bank, Kingfisher, Okla.)

FDIC Enforcement Decisions and Orders