Alleged, illegal inducements to deceive customers to obtain “cash out” loans on their homes have led a Chicago bank to consent to pay restitution for high origination fees and increased monthly payments, the national bank regulator said Thursday.
According to the Office of the Comptroller of the Currency (OCC), The Federal Savings Bank of Chicago signed the consent order after the agency found the bank allegedly made “false or misleading statements to consumers.”
Among other things, in the period of 2022-24, the OCC said the bank “sent consumers millions of deceptive advertisements that stated the consumer had ‘available funds’ and instructed the consumer to contact the Bank.” The OCC asserted that the advertisement was a solicitation for a Veterans Affairs (VA) cash-out refinance loan and a new loan was required to access the funds.
The agency also claimed that some bank workers allegedly made “deceptive statements to consumers indicating that the Bank maintained a special relationship with the VA.” The workers also allegedly made misleading statements and about the terms of the loans that “created the impression that the consumer’s interest rate or monthly payment would significantly decrease within a defined time period,” the OCC said.
“However, the cash-out refinance loan was a permanent loan with a fixed interest rate and mortgage payment, and the Bank could not in fact guarantee that the consumers would be able to refinance their loans with the lower interest or monthly payments as stated or implied by Bank employees,” the OCC said.
The OCC argued that the deceptive statements induced customers to obtain the cash-out refinance loans. That resulted, the agency said, in some consumers “paying significant origination fees and receiving refinanced mortgage loans with significantly increased interest rates and monthly payments.”
In other action, the OCC said it had prohibited:
- Shaira Ahmed, former associated banker at JP Morgan Chase Bank, N.A., of Columbus, Ohio, for allegedly embezzling more than $73,00 from bank customer accounts.
- Marissa Murillo, former associate banker at BMO Bank, N.A., of Chicago, for allegedly making unauthorized withdrawals from an elderly customer’s account of more than $164,000.
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