The Consumer Financial Protection Bureau last week announced another in a long line of consent orders issued in the name of consumer protection. This one, however, is unlike any others. This consent order penalizes a land development company, International Land Consultants, for not maintaining the roads in a Tennessee county. The consent order can be found here.
The curious edict stems from an obscure part of the CFPB’s authority. The Dodd-Frank Act transferred authority to enforce a number of rules from the Department of Housing and Urban Development (HUD) to the CFPB, including one that sets restrictions on how a registered development must be marketed and reported. International Land Consultants is a developer that finds itself subject to CFPB scrutiny under the Interstate Land Sales Full Disclosure Act of 1968.
The consent order alleges that the developer “made misrepresentations to consumers” about the roads in a Tennessee development called Hawks Bluff. “Among other things, they misrepresented in marketing materials and HUD-registered Property Reports that they would maintain the roads until they were accepted by Van Buren County, Tennessee,” the CFPB said in a press release. “In fact, the roads have not been maintained, and have not been accepted by the county.”
The violations occurred when the parties incorrectly reported that the roads in the development were complete and built to the standards for approved private status in both HUD’s registered-property report and a Public Offering Statement that is distributed to property owners and potential purchasers. The property report also indicated that the roads would be maintained by the seller until they were accepted by the county, the order said. The CFPB in 2013 began to receive emails and calls claiming that the roads were in poor shape because neither the developer nor the county would maintain them.
The consent order does not indicate that any individuals were directly harmed financially, nor does it mention any specific profit that the developer made illicitly. The consent order does not address the likely transfer of title to the lots since 2004 or why so much time has elapsed between the alleged infractions and this CFPB action. Rather than a fine and a civil penalty as is typical of CFPB, this consent order requires International Land Consultants to repair certain roads in Hawks Bluff. The repairs must be made according to an engineering report that the developer is required to pay for from an “independent consultant” engineering firm specified by the CFPB. It will be the engineering report that ultimately determines which specific roads are to be repaired and therefore the total cost the developer. The CFPB has ultimate authority to declare the task completed.