The Consumer Financial Protection Bureau continues its crackdown on mortgage brokers who run afoul of regulations on Veterans Administration loans. The CFPB issued its eighth consent order in the last seven weeks against ClearPath Lending Inc., a California corporation that is licensed as a mortgage broker or lender in about 22 states.
The bureau found that ClearPath
sent consumers mailers for VA-guaranteed mortgages that contained false, misleading, and inaccurate statements or that lacked required disclosures, in violation of the Consumer Financial Protection Act’s (CFPA) prohibition against deceptive acts and practices, the Mortgage Acts and Practices – Advertising Rule (MAP Rule), and Regulation Z. The consent order requires ClearPath to pay a civil money penalty of $625,000 and imposes requirements to prevent future violations.
ClearPath, according to the consent order,
disseminated advertisements misrepresenting the credit terms of the advertised mortgage loan by stating terms the company was not actually prepared to offer to the consumer, including misrepresenting the annual percentage rate applicable to the advertised mortgage. ClearPath also misleadingly advertised rates or payments as fixed, even though the advertised mortgage was an adjustable-rate mortgage or the payment was not fixed for the indicated duration.
ClearPath also misrepresented the existence, nature, or amount of cash or credit available to the consumer, and the existence or amount of fees or costs to the consumer, in connection with the advertised mortgage. The Bureau also found that ClearPath advertisements created the false impression that ClearPath was affiliated with the VA.
ClearPath advertisements also failed to properly disclose, when required by Regulation Z, credit terms for the advertised mortgage, such as the number and time period of payments associated with the consumer’s repayment obligations over the full term of the loan. Finally, the bureau found that ClearPath advertisements used the name of the consumer’s lender in a misleading way by not adequately disclosing ClearPath’s name and the fact that it was not associated with, or acting on behalf of, the consumer’s current lender, as required by Regulation Z.
The consent order, in addition to the civil penalty, also requires ClearPath to bolster its compliance functions by designating an advertising compliance official who must review its mortgage advertisements for compliance with mortgage advertising laws prior to their use; prohibiting misrepresentations similar to those identified by the bureau; and requiring ClearPath to comply with certain enhanced disclosure requirements to prevent future misrepresentations.