On September 1, 2020, the CFPB settled with another mortgage company regarding deceptive loan advertisements sent to service members and veterans. Over the past few years, the CFPB has not entered into many consent orders with mortgage loan originators. However, it seems to be focusing its energies on companies that provide financial services to veterans and service members. The CFPB alleged that Hypotec, Inc. had disseminated millions of advertisements containing inaccurate statements regarding the availability of loan programs, interest rates and loan terms that it was not prepared to offer to consumers. The CFPB also alleged numerous failures to provide required information in connection with triggering terms listed in the advertisements (i.e., listing a payment amount without listing the period the payments are due, listing a simple interest rate without listing the APR). The consent order included a lengthy list of statutes and regulations allegedly violated, such as Reg Z, the MAP Rule and TILA, just to name a few. Hypotec, Inc. agreed to pay $50,000 and to significant restrictions on the language in its future advertisements as well as other compliance and reporting requirements to the CFPB. While this is a relatively small penalty, the other 5 similar CFPB consent orders with other companies related to solicitations to veterans and service members over the past few months have totaled close to $2 million.
In light of the CFPB’s lack of enforcement actions over the past few years, loan originators may feel more relaxed with respect to advertising compliance. If you are a loan originator marketing to service members and veterans, the CFPB seems to be very interested in your business. A review of your company’s marketing material before it is run may prevent a CFPB investigation.