Allegations of false advertising through marketing pieces that appeared to be government-affiliated have landed three separate mortgage banking firms in hot water with federal regulators.
Implying an affiliation with the government in advertisements violates the 2011 Mortgage Acts and Practices Advertising Rule.
But that’s just what
All Financial Services Inc., Flagship Financial Group LLC and American Preferred Lending Inc. are accused of doing.
According to a statement Thursday from the Consumer Financial Protection Bureau,
the three firms misled consumers with false advertising.
The violations were uncovered through a joint sweep conducted by the CFPB and the Federal Trade Commission. Eight-hundred randomly selected mortgage-related ads were reviewed.
Owings Mills, Md.-based All Financial is accused of placing ads that appeared to be from, or affiliated with, a government entity. In addition, it is alleged to have misrepresented that the home-equity conversion mortgage program was time-limited or had a deadline.
The CFPB described one of the mortgage broker’s reverse mortgage ads, which was sent to 200,000 people, as
displaying an eagle resembling the “Great Seal of the United States.”
All Financial allegedly said in its ads that no payments “whatsoever” are required on a reverse mortgage. The regulator claims that was misleading since reverse mortgage borrowers are still required to pay taxes and insurance. It was also misleading because, at the time, a non-borrowing spouse
has to pay off the loan if the borrower dies.
The CFPB filed a complaint Thursday in a federal court in Maryland against
All Financial seeking a civil fine and a permanent injunction to prevent future violations.
Flagship is accused of sending a million mailings that implied its Department of Veterans Affairs loans were endorsed or sponsored by the Department of Housing and Urban Development even though it has no unique affiliation beyond that of other VA lenders.
The mail pieces said, “HUD-Approved Flagship Financial Group has been directed to get VA homeowners instant relief by lowering their monthly payments.”
Flagship allegedly also sent tens of thousands of mailers promoting credit products that looked like a government notice.
“For example, the mailings had a heading, ‘PURSUANT TO THE FEDERAL HOUSING ADMINISTRATION (FHA) HUD No. 12-045,’ instructed consumers to call their ‘assigned FHA loan specialist,’ and obscured the company’s name as the source of the advertisements,” the bureau said.
A consent order was issued against Lehi, Utah-based Flagship. In addition, it will pay a $225,000 civil penalty.
Finally, American Preferred is accused of sending notices between August 2011 and February 2013 that appeared to be from the government. It allegedly sent more than 100,000 pieces that had an FHA-approved lending institution logo and referenced the web address, www.FHAdept.us.
“These factors combined gave the impression that the ads were from the U.S. government, or an entity affiliated with the government,” the CFPB said.
A consent order was issued against
San Diego-based American Preferred, and it will pay an $85,000 civil penalty.
