In an agency order issued on February 27, the Consumer Financial Protection Bureau (CFPB) permanently banned RMK Financial Corporation from the mortgage lending industry. In addition to imposing a penalty of $1,000,000, the order prohibits the lender from engaging in any mortgage lending activities or receiving remuneration from mortgage lending.
The CFPB based its decision on findings that the lender sent millions of mortgage advertisements to military families that made deceptive representations or contained inadequate or impermissible disclosures. Specifically, the advertisements falsely represented that the lender was, or was affiliated with, the U.S. Department of Veterans Affairs (VA) or the Federal Housing Administration (FHA), and that the advertised loans were provided by the VA or FHA. This included the use of fake VA seals, the FHA logo, and language implying that the lender was affiliated with the government. The CFPB further found that the advertisements deceived borrowers about the interest rates available and misrepresented the projected savings from refinancing.
The CFPB’s action was not based on a one-time offense. Previously, in 2015, the CFPB imposed a penalty of $250,000 and ordered the lender to stop issuing advertisements that led consumers to believe that the company was affiliated with the U.S. government. The company’s refusal to comply with the 2015 order resulted in more severe action being taken. As CFPB Director Rohit Chopra explained:
Even after the 2015 law enforcement order, RMK continued to lie to military families by falsely implying government endorsement of its home loans. Our action reflects our commitment to weed out repeat offenders, and we are shutting down this outfit for good.
The CFPB’s order demonstrates its commitment to eliminating deceptive advertising practices in the mortgage lending industry. The result is a positive for the many honest lenders in the market who should not have to compete with entities that refuse to play by the rules.