The Consumer Financial Protection Bureau continued its crackdown on deceptive VA lending Monday by slapping a penalty on yet another mortgage company for deceptive advertising.
The CFPB issued a consent order against ClearPath Lending, a California corporation that is licensed as a mortgage broker or lender in 22 states. The order requires ClearPath to pay a $625,00 civil penalty.
ClearPath offers VA loans, and its principal means of advertising those loans is through direct mail, sent primarily to military service members and veterans. According to the CFPB, ClearPath mailed out millions of advertisements containing false information or lacking required disclosures. For instance, the lender frequently advertised interest rates that it did not actually offer, the CFPB said.
“Numerous ClearPath mortgage advertisements described mortgages with a simple interest rate and APR combination that, on the date of the advertisement, ClearPath was not actually prepared to offer or arrange,” the bureau said in a court filing. “For example, ClearPath advertisements sent to arounf 260,000 consumers in November and December 2017 advertised a variable-rate mortgage with a fixed interest of 2.25% for the first three years and an APR of 3.17%. in fact, the advertised APR was not correct because it did not take into account a reasonably current index for the variable-rate period and required discount points. The actual APR for this loan, calculated in accordance with Regulation Z and taking into account a reasonably current index and required discount points, was at least 3.516%.”
ClearPath also sent advertisements containing the words “NO Lender Fees” in a bold font. That, too, was false, the CFPB said.
“In fact, consumers could not obtain a loan from ClearPath with an APR of 3.17% without paying two discount points at closing,” the Bureau said.
The company also advertised rates as “fixed” when the mortgage advertised was an adjustable-rate mortgage, the CFPB said. In addition, ClearPath’s advertisements falsely implied that the company was affiliated with the VA, the bureau said.
In addition to the $625,000 penalty, the consent order requires ClearPath to designate an advertising compliance officer who must review its advertisements prior to their use.
The action against ClearPath is the eighth case stemming from a sweeping CFPB investigation into multiple VA mortgage companies. The bureau commenced the probe in response to concerns about potentially illegal advertising identified by the VA.