The Consumer Financial Protection Bureau issued a consent order against mortgage broker and lender Accelerate Mortgage on Wednesday following recent investigations of mortgage companies that use deceptive mailers to advertise loans guaranteed by the United States Department of Veterans Affairs. Accelerate’s investigation marks the seventh company this summer to settle with the CFPB for similar actions.
The most recent case found that Accelerate had sent consumers numerous mailers for VA-guaranteed mortgages that contained false, misleading, and inaccurate statements or that lacked required disclosures.
According to the CFPB, Accelerate advertisements misrepresented the credit terms of its advertised mortgage loans by “stating credit terms that the company was not actually prepared to offer to the consumer.” Its advertisements also falsely represented that the consumer’s access to mortgage-refinance benefits through VA-guaranteed loans were “time-limited,” the release said.
On Tuesday, the Bureau settled with Service 1st Mortgage, Inc., and Hypotec Inc for advertisements with specific credit terms, such as interest rates, APRs, and hypothetical payment amounts that they were not prepared to offer, or that they could only offer for an introductory period but advertised as if they were permanent loan terms.
August 26, the CFPB settled with PHLoans, Inc., for failing to properly disclose the consumer’s repayment obligations over the full term of the loan, among other deceptive practices.
The CFPB also announced consent orders on Aug. 21 against Go Direct Lenders, Inc., and on July 24 against Sovereign Lending Group, Inc., and Prime Choice Funding, Inc., for similar violations.
Each settlement included requirements for various civil money penalties and conditions imposed to prevent future violations and bolster compliance functions. In the case of Accelerate, the CFPB’s consent order requires the lender to pay a penalty of $225,000 and implement an advertising compliance official who must review its mortgage advertisements for compliance prior to use.
According to the CFPB, the Bureau commenced this sweep in response to concerns about potentially unlawful advertising in the market that the VA identified. However, the CFPB’s recent investigations are not the first time a government entity examined mortgage lenders for targeting veterans.
In 2017, Ginnie Mae investigated a number of mortgage lenders that were allegedly targeting servicemembers and military veterans for quick and potentially risky refinances of their mortgages. As a result, several lenders were booted from its primary mortgage bond program the following year.
In 2019, the Federal Trade Commission revealed it had received 163,000 fraud reports from military retirees and veterans since 2015, with an average loss of $950.
According to a recent report on Department of Veterans Affairs data, borrowers are taking advantage of historically low rates leading to a 114% spike in VA loans through the first three quarters of fiscal year 2020 compared to the same period last year. A surge in VA refinance loans is driving the increase, with Q3 refinances spiking 296% year-over-year, the report said.
