Skip to main content

CFPB Takes Aim at Pension Advance Loans
Aug 21, 2015

The Consumer Financial Protection Bureau (CFPB) and the New York Department of Financial Services (NYDFS) filed a lawsuit in federal court against two companies, Pension Funding LLC and Pension Income LLC, and three of the companies’ individual managers for deceiving consumers about the costs and risks of their pension advance loans. The CFPB and NYDFS allege that the companies duped consumers into borrowing against their pensions by deceptively marketing the product as a sale instead of a loan and failing to disclose high interest rates and fees. The CFPB and NYDFS are seeking to end the illegal practices, to prevent further consumer injury, and to obtain redress for consumers and other monetary relief.

“These companies duped consumers into taking out pension advance loans by deceiving them about the terms of the deal,” said CFPB Director Richard Cordray. “We are working to put a stop to the illegal practices these companies are using to sell their bogus product to military veterans and other pensioners.”

“As outlined in our complaint, the defendants used blatantly deceptive practices to harvest the hard-earned pensions of seniors and military personnel,” said Anthony J. Albanese, Acting New York Superintendent of Financial Services. “This scheme involved false advertising, illegal loans at high interest rates, and other abusive tactics that our Department simply will not tolerate. Together with the Consumer Financial Protection Bureau, we are seeking to deliver relief to the pensioners on whom the defendants preyed. We thank our partners at the CFPB for their outstanding work and cooperation in investigating and pursuing this matter, and the attorneys at the New York Attorney General’s Office for their representation of the Department in this matter.”

From 2011 until about December 2014, Pension Funding and Pension Income, two California-based companies, offered consumers lump-sum cash advances for agreeing to redirect all or part of their pension payments over a period of eight years. The individual defendants, Steven Covey, Edwin Lichtig, and Rex Hofelter, designed and marketed these loans and were responsible for the companies’ daily operations. 

The complaint filed by the CFPB and NYDFS alleges that the companies and individuals violated the Dodd-Frank Wall Street Reform and Consumer Protection Act by:

Misrepresenting the product as a sale and not a loan: The CFPB and NYDFS allege that the companies represented to consumers that their product was not a loan, but rather a “sale” of their future pension income. In fact, the CFPB and NYDFS allege, the product was a loan.

Failing to disclose or misrepresenting the interest rate and fees for the loans: The CFPB and NYDFS allege that the defendants, in many cases, misrepresented or failed to inform consumers of the applicable interest rate or fees for the loans. In some cases, the defendants advised consumers that the product was better than a home equity line of credit or a credit card because of lower rates and fees. In fact, the effective interest rate typically was greater than 28 percent, higher than many comparable products available to consumers, such as credit cards and home equity lines. Charges for life insurance and other fees also applied.

The CFPB and NYDFS allege that the companies’ misrepresentations deceived consumers, interfered with consumers’ ability to understand the risks, costs, and conditions of the transactions, and took advantage of consumers’ lack of understanding of the product and inability to protect their interests.

NYDFS also alleges claims against the defendants under New York state law, including that the defendants charged interest rates that violated New York usury laws, that they illegally transmitted money without a license, and that they violated state laws prohibiting deception.

The complaint filed by the CFPB and NYDFS is not a finding or ruling that the defendants have actually violated the law. It has been filed with the U.S. District Court for the Central District of California.

Aug 21, 2015
Feds Reviewing Appraisal Standards, Qualifications

Appraisal Subcommittee said requirements are being reviewed to determine whether they ensure and promote fairness, equity, objectivity, and diversity, in both appraisals and in the training and credentialing of appraisers.

Regulation and Compliance
Oct 20, 2021
​​​​​​​FHFA OK's Desktop Appraisals, Expands Refi Criteria

The Federal Housing Finance Agency (FHFA) said Monday it will take two steps to help make home ownership more affordable and sustainable for mortgage borrowers, especially for those in underserved communities. 

Regulation and Compliance
Oct 19, 2021
CFPB Names 4 To Key Senior Positions

The appointees include two who helped create the bureau and two who served on the CFPB staff during the Obama administration.

Regulation and Compliance
Oct 14, 2021
FHFA Raises Enterprises' Multifamily Loan Purchase Caps

The Federal Housing Finance Agency (FHFA) said the 2022 multifamily loan purchase caps will be $78 billion for each Enterprise, for a combined total of $156 billion to support the multifamily market.

Regulation and Compliance
Oct 13, 2021
CFPB Hits AAG With Complaint For Deceptive Marketing Of Reverse Mortgages

The Consumer Financial Protection Bureau filed a complaint and proposed consent order, which alleges that American Advisors Group (AAG) used inflated and deceptive home estimates to attract reverse mortgage consumers.

Regulation and Compliance
Oct 12, 2021
Waterstone Mortgage Names VP Of Compliance

Waterstone Mortgage Corporation named Kris Barros as the company's vice president of compliance.

Oct 08, 2021