RSSThe Consumer Financial Protection Bureau has settled with a pair of mortgage companies over deceptive advertisements targeted at servicemembers and veterans. The agency issued consent orders against Florida-based Hypotec and Maryland’s Service 1st Mortgage, which both offer mortgages guaranteed by the Department of Veterans Affairs.
The bureau alleges that the two companies sent mailers that contained false, misleading, and inaccurate statements or that lacked required disclosures, in violation of the Consumer Financial Protection Act’s prohibition against deceptive acts and practices, the Mortgage Acts and Practices’s Advertising Rule, and Regulation Z.
Service 1st was fined $230,000 for deceptive advertising it had mailed since December 2015. The material allegedly misrepresented specific credit terms it was offering or its relationship to the VA, among other claims. In other advertisements sent between April 2016 and May 2017, the company also misrepresented how an escrow refund would function in the case of a customer refinancing through Service 1st.
Between December 2015 and April 2017, Service 1st also sent advertisements telling customers they could “skip two payments” or “miss” two payments by refinancing with the company, but it did not disclose the limitations on this option, or that the skipped or missed payments would be added to the principal balance of the consumer’s loan.
Hypotec was fined $50,000 for mailings since 2016 which allegedly misrepresented specific credit terms it was offering or its relationship to the VA, among other claims. From June 2016 and January 2019, it sent advertisements which misrepresented how it would handle escrow refunds.
The pair of orders is part of a broader CFPB push against mortgage companies that use deceptive mailers to advertise VA-guaranteed mortgages. On July 24, the bureau announced consent orders against Sovereign Lending Group, Inc., and Prime Choice Funding, Inc. In August, it issued consent orders against Go Direct Lenders, Inc., and PHLoans.com, Inc.
Miami-based Hypotec is licensed in eight states; Glen Burnie-based Service 1st is licensed in 12.
