PhotoRMK Financial Corporation whose deceptive mortgage advertising practices included ads that led consumers to believe that the company was affiliated with the government, will pay a heavy price


The Consumer Financial Protection Bureau (CFPB) is ordering the firm to end its illegal and deceptive practices and pay a civil penalty of $250,000.


“Deceptive advertising has no place in the mortgage marketplace,” said CFPB Director Richard Cordray, “and the Consumer Bureau will continue to take action against companies that mislead consumers with false claims of government affiliation. This action, he continued “ sends a clear message that misleading consumers is illegal, unacceptable, and will not be tolerated.”


False impressions


The California-based mortgage lender, which also does business under the name Majestic Home Loans, mailed print advertisements to more than 100,000 consumers in several states, using the names and logos of the Department of Veterans Affairs (VA) and the Federal Housing Administration (FHA).


The CFPB says the ads were sent in a way that falsely implied that they were sent by those agencies, or that the company or the advertised mortgage products were endorsed or sponsored by them.


The ads were sent to tens of thousands of U.S. military servicemembers and veterans, and other holders of VA-guaranteed mortgages.


The company’s typical ad for VA mortgages featured the VA seal and logo at the top of the page and described its loan products as part of a “distinctive program offered by the U.S. government.” The ad instructed consumers to call the “VA Interest Rate Reduction Department” at a phone number that in fact belonged to RMK.


Some mailers were labeled “FHA Benefits” and included an image of the Statue of Liberty on the outside, along with warnings citing the U.S. Code and threatening fines and imprisonment for tampering with the letter.


The ads also contained misrepresentations about the loans’ interest rates and estimated monthly payments, including whether the interest rate was fixed or variable. Consumers who called the company were sometimes given misleading information over the phone; in some cases RMK employees told callers or implied that RMK was endorsed by the VA or FHA.


Major violations


The CFPB’s investigation found that RMK’s practices violated the Truth in Lending Act, the Mortgage Acts and Practices Advertising Rule, and other federal consumer laws. The 2011 Mortgage Acts and Practices Advertising Rule prohibits misleading claims in mortgage advertising, including implying a government affiliation.


Under the terms of the consent order, RMK will be prohibited from falsely implying a government affiliation in future advertisements. It will also pay a civil penalty of $250,000.

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