Low VA Rates LLC settles with Bureau over deceptive VA loan ads

The CFPB has issued a consent order against Low VA Rates LLC, a Lindon, Utah-based mortgage lender and broker incorporated in Colorado and licensed in 48 states and the District of Columbia. The order addresses the Bureau’s finding that Low VA Rates sent consumers mailers for mortgage loans guaranteed by the U.S. Department of Veterans Affairs (VA) that contained false, misleading, and inaccurate statements, which violated the Consumer Financial Protection Act’s (CFPA) prohibition against deceptive acts and practices, the Mortgage Acts and Practices – Advertising Rule (MAP Rule, Regulation N), and Regulation Z. The order requires Low VA Rates to pay a civil money penalty of $1,800,000 to the Bureau and imposes requirements to prevent future violations.

This CFPB action is the ninth and last case stemming from a Bureau sweep of investigations of multiple mortgage companies that used deceptive mailers to advertise VA-guaranteed mortgages. The Bureau began the sweep in response to concerns raised by the VA about potentially unlawful advertising in the mortgage lending market. The Bureau has obtained more than $4.4 million in civil money penalties as a result of this sweep.

The Bureau found that Low VA Rates, in its advertisements—

• misrepresented the credit terms of the advertised mortgage loan by stating credit terms that the company was not actually prepared to offer to consumers, including misrepresenting the annual percentage rate applicable to the advertised mortgage.
• misrepresented the existence, nature, or amount of cash or credit available to consumers
• used misleading rhetorical questions, in connection with advertised mortgages
• failed to properly disclose, when required by Regulation Z, credit terms for the advertised mortgage, such as the amount of each payment and time period of payments associated with consumers’ repayment obligations over the full term of the loan
• misleadingly indicated that its mortgage products could help consumers eliminate debt
• made misleading comparisons involving actual or hypothetical loan terms

In addition to the $1.8 million civil money penalty, to prevent future violations, the consent order requires Low VA Rates 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 use
• refrain from making misrepresentations like those identified by the Bureau through its investigation
• comply with certain enhanced disclosure requirements