ClearPath Lending, Inc., is eighth company to settle with CFPB over deceptive VA loan ads

The Consumer Financial Protection Bureau issued a consent order against ClearPath Lending, Inc., a California corporation licensed as a mortgage broker or lender in 22 states. ClearPath offers and provides mortgage loans guaranteed by the United States Department of Veterans Affairs (VA). 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 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.

The Bureau found, and ClearPath neither admits nor denies, that ClearPath:

• disseminated advertisements that contained false, misleading, and inaccurate statements or that failed to include required disclosures.
  • For example, ClearPath advertisements misrepresented the credit terms of the advertised mortgage loan,
  • stated credit terms that the company was not actually prepared to offer to the consumer
  • misrepresented the annual percentage rate applicable to the advertised mortgage
• 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
• 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.
• used advertisements that created the false impression that ClearPath was affiliated with the VA
• 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
• in 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.

In addition to imposing the civil money penalty, the consent order imposes injunctive relief to prevent future violations, including requiring 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.