Banking and Finance Law Daily CFPB settles with a seventh mortgage lender over loan advertisements to servicemembers
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Thursday, September 3, 2020

CFPB settles with a seventh mortgage lender over loan advertisements to servicemembers

By Nicole D. Prysby, J.D.

The Bureau entered into a settlement with a mortgage lender operating in 31 states, over claims that it sent misleading direct-mail advertisements to servicemembers.

The Consumer Financial Protection Bureau (Bureau) has settled claims with Accelerate Mortgage, LLC, resolving allegations that the company sent deceptive mortgage loan advertisements to servicemembers and veterans. Accelerate will pay a $225,000 civil money penalty. The settlement is the latest in a series of cases against mortgage lenders alleged to have deceptively marketed loans to servicemembers; the Bureau previously settled with six other mortgage lenders.

Settlement with Accelerate. On Sept. 2, 2020, the Bureau announced that it entered into a settlement with Accelerate, a mortgage broker and lender operating in 31 states that provides mortgage loans guaranteed by the U.S. Department of Veteran Affairs (VA). The settlement resolves allegations that Accelerate sent consumers mailers for VA-guaranteed mortgages that contained false, misleading, and inaccurate statements or lacked required disclosures, in violation of the Consumer Financial Protection Act (CFPA), the Mortgage Acts and Practices—Advertising Rule (MAP Rule), and Regulation Z—Truth in Lending.

According to the consent order, since April 2018, Accelerate sent more than one million mailers that violate federal law. Specifically, Accelerate made false or misleading representations about loan cost and other terms. For example, Accelerate advertisements sent to consumers in April 2018 advertised a VA cash-out refinance loan with a fixed simple interest rate of 3.75 percent. But the lowest available rate at the time for a VA cash-out refinance loan offered by Accelerate was 4.875 percent. Accelerate’s mailer also stated that that there were "No Closing Costs" for the advertised loan. But VA loans have closing costs, and Accelerate has never closed a VA loan without closing costs. Accelerate advertisements also falsely represented that the company was affiliated with a government agency, such as sending 380,000 mailers that were formatted to look like a notification letter from the Internal Revenue Service and 6,500 mailers that displayed an official "Member FDIC" logo, even though Accelerate has never been a member of the FDIC. Accelerate falsely represented that a VA loan program would expire in 2019, although a veteran’s eligibility for the benefits of a VA loan never expire. Accelerate provided inadequate disclosures, such as stating the terms of repayment only for the cash-out portion of a refinance loan, while omitting the terms of repayment for the full amount of the loan.

Civil penalty, relief. The consent order requires Accelerate to pay a civil penalty of $225,000 and imposes injunctive relief to prevent future violations, including requiring Accelerate to designate an advertising compliance official who must review its mortgage advertisements for compliance with mortgage advertising laws prior to their use. Accelerate stipulated to the entry of the consent order, without admitting wrongdoing.

Prior settlements. The Bureau’s action against Accelerate is the seventh settlement resulting from a Bureau investigation of multiple mortgage companies that use mailers to advertise VA-guaranteed mortgages. The Bureau commenced its investigation in response to concerns about potentially unlawful advertising in the market that the VA identified. Previously, the Bureau announced similar consent orders against Sovereign Lending Group, Inc. and Prime Choice Funding, Inc. (see Banking and Finance Law Daily, July 27, 2020), Go Direct Lenders, Inc., (see Banking and Finance Law Daily, Aug. 24, 2020), PHLLoans.com, Inc. (see Banking and Finance Law Daily, Aug. 27, 2020), and Hypotec, Inc. and Service 1st Mortgage, Inc. (see Banking and Finance Law Daily, Sept. 2, 2020), for similar violations.

Companies: Accelerate Mortgage, LLC

MainStory: TopStory CFPB EnforcementActions Loans Mortgages TruthInLending UDAAP

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