Two mortgage companies that sent deceptive loan ads to servicemembers and veterans settle with CFPB
July 31, 2020
The Consumer Financial Protection Bureau issued a consent order Friday against Sovereign Lending Group Inc., a mortgage lender in about 44 states and the District of Columbia.
Sovereign offers mortgage loans guaranteed by the U.S. Department of Veterans Affairs. Sovereign’s main advertising is through direct-mail campaigns targeted mostly at U.S. military servicemembers and veterans.
Sovereign sent consumers hundreds of thousands of mailers for VA-guaranteed mortgages that contained false, misleading, and inaccurate statements or that lacked required disclosures in violation of federal laws and rules.
The ads misrepresented the credit terms of the mortgages, misleadingly described an adjustable-rate mortgage as having a “fixed” rate, and falsely stated that the consumer had been prequalified for the advertised mortgage. The ads also created the false impression that Sovereign was affiliated with the government, used the name of the consumer’s current lender in a misleading way, and failed to include disclosures required by Regulation Z.
The consent order requires Sovereign to pay a $460,000 penalty and imposes requirements to prevent future violations.
The action came after CFPB investigations of mortgage companies that use deceptive mailers to advertise VA-guaranteed mortgages.
On July 24, the CFPB issued a consent order against Prime Choice Funding Inc. for similar violations.
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