Today the Consumer Financial Protection Bureau (CFPB) announced that it took action against California mortgage lender RMK Financial Corporation for deceptive advertising practices. The bulk of the CFPB’s complaints were that RMK Financial, which also does business under the name Majestic Home Loans, ran ads that led consumers to falsely believe that the company was affiliated with the government. Under the terms of the RMK Financial Corporation consent order, RMK must pay a civil penalty of $250,000 in addition to halting the practices the CFPB found issue with.
In a press statement, CFPB Director spoke out against such practices, saying, “Deceptive advertising has no place in the mortgage marketplace, and the Consumer Bureau will continue to take action against companies that mislead consumers with false claims of government affiliation. Today’s action sends a clear message that misleading consumers is illegal, unacceptable, and will not be tolerated.”
In the details of the consent order, the CFPB revealed that RMK mailed print ads to more than 100,000 consumers, using the names and logos of the Department of Veterans Affairs (VA) and the Federal Housing Administration (FHA). These ads implied that they came directly from the VA or FHA, or were endorsed by them. The ads were sent to service members and veterans, as well as holders of VA-guaranteed mortgages, in multiple states.
“RMK’s ads also contained misrepresentations about the loans’ interest rates and estimated monthly payments, including whether the interest rate was fixed or variable,” the CFPB said.
Such ads violate the Truth in Lending Act, the Mortgage Acts and Practices Advertising Rule, and other federal consumer laws, according to the CFPB’s investigation. In addition, the 2011 Mortgage Acts and Practices Advertising Rule prohibits misleading claims in mortgage advertising, including implying a government affiliation, the CFPB noted.