Feds say mortgage firms used deceptive ads
The federal government is cracking down on deceptive advertisements for home loans.
The Consumer Financial Protection Bureau said Thursday that it is suing one mortgage company and penalizing two others for allegedly misleading consumers by using ads that appeared to be government notices. That falsely suggests the government has approved the products, according to the regulatory agency.
The lawsuit was filed against reverse mortgage lender All Financial Services. The CFPB also ordered Flagship Financial Group and American Preferred Lending to stop the practice.
"Each of these companies has misled consumers with false advertising," CFPB Director Richard Cordray said in a statement. "The U.S. government is very serious about stopping companies from falsely claiming federal authority, and we are particularly concerned about false or deceptive statements made in advertisements about reverse mortgages that target older Americans."
The actions were taken following the review of about 800 mortgage ads.
The CFPB cited a 2011 law restricting ad claims in mortgage advertising, including a prohibition on companies implying a government affiliation where none exists. The three mortgage companies targeted by the bureau sent out mailings that were made to appear as though they came from the government, the agency said.
Maryland-based All Financial Services also allegedly produced ads that misled consumers about the terms of its reverse mortgages, the CFPB said. The lawsuit filed against the company seeks civil penalties and a permanent injunction against such advertising claims.
Utah-based Flagship Financial Group used the term "HUD-Approved" in its advertising, the CFPB said. That made it appear as though the U.S. Department of Housing and Urban Development had endorsed its loan product, when it hadn't. The company is prohibited from making claims or implying a government affiliation and has agreed to pay a penalty of $225,000.
California-based American Preferred Lending used logos that made it look like its mailings were from the government. The company also used the misleading website www.FHAdept.us, the CFPB said. The agency barred American Preferred, which will pay a penalty of $85,000, from falsely implying government affiliations.
