CFPB settles with company over false loan ads

The Bureau has issued a consent order against Go Direct Lenders, Inc., a California corporation licensed as a mortgage broker or lender in about 11 states. The Bureau found that Go Direct sent consumers numerous 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.

Specifically, the Bureau found that Go Direct advertisements:

• misrepresented the credit terms of the advertised mortgage loan by stating credit terms that the company was not actually prepared to offer to the consumer, including advertising a lower annual percentage rate than it was prepared to offer
• made misrepresentations about the applicable fees in connection with the advertised mortgage
• misleadingly described variable-rate loans as “fixed” rate loans, when in fact the rate was adjustable and could increase over time
• falsely stated or implied that an appraisal, assets, and income documentation were not required to qualify for certain loans and that consumers with FICO scores as low as 500 would qualify for the advertised rates
• falsely represented that it had records showing that the value of the consumer’s property had increased over the past year by a specific percentage
• created the false impression that Go Direct was affiliated with the government by using words, phrases, images, or design characteristics that are associated with the VA or the Internal Revenue Service
• failed to properly disclose, when required by Regulation Z, credit terms for the advertised mortgage, such as the consumer’s repayment obligations over the full term of the loan.

The consent order requires Go Direct to pay a civil money penalty of $150,000 and imposes requirements to prevent future violations.

• CFPB press release