CFPB increases enforcement activity with servicemember mortgage actions

It’s September 21st, which means tomorrow is officially the first day of Autumn! I personally am looking forward to the colorful foliage, cooler temperatures, and Halloween decorations. Looking back as Summer 2020 draws to a close, one thing in particular jumps out at me: the Consumer Financial Protection Bureau (CFPB) stepped-up its enforcement efforts over the summer. Whereas the bureau had only announced 9 new enforcement actions in the first six months of 2020 (January through June), the bureau has brought 18 actions in the three-month period of July, August, and September. This up-tick in enforcement activity has been driven by a group of consent orders with non-bank mortgage companies alleging violations in how they marketed mortgages to U.S. servicemembers.

Since late July, the CFPB has brought 8 actions against mortgage companies that market mortgages to servicemembers. The consent orders have typically alleged violations of 3 different laws and regulations – (1) Regulation Z; (2) the Mortgage Acts and Practices (MAP) Rule’s Advertising Provisions (Regulation N); and (3) Federal UDAAP laws. That second regulation is an FTC regulation that explicitly excludes credit unions from its coverage, and instead tends to cover non-bank mortgage companies requiring a state license.

Overall, the actions allege numerous misleading advertising tactics, such as disguising advertisements as official communications from the federal government, stating rates and other credit terms that were not actually available to consumers, and falsely claiming the consumer’s property values had increased.

With regard to Regulation Z, the bureau alleged numerous violations of section 1026.24, which contains the advertising requirements for closed-end loans, including mortgages. Here are some of the alleged violations of section 1026.24 the bureau cited:

 

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