We’re announcing an enforcement action against a lender that wrongfully used the logos of the Department of Veterans Affairs (VA) and the Federal Housing Administration (FHA). RMK Financial Corporation (also doing business as Majestic Home Loans) sent out ads to veterans and other VA-eligible borrowers that misled consumers to think that RMK’s products were endorsed by the VA, or even sent by the VA, and they misrepresented the terms and costs of the mortgages themselves. This is the fifth enforcement action we’ve completed in the past two months against companies using deceptive mortgage advertising.
Deceptive advertising to mislead consumers
RMK sent out mailings to over 100,000 consumers across the country. These ads used the name, seal, and logos of the VA, giving the impression that the VA had sent the ad or endorsed the product. Also, the ads misrepresented the price of the advertised mortgages, including whether the interest rate was fixed or variable. Sometimes, important disclosures about loan rates were hidden on the back of the ads or buried in fine print. Envelopes were plastered with warnings about “fines or imprisonment” under US law.
Two years ago, along with the Federal Trade Commission, we warned companies that were placing mortgage ads directed at consumers, some of which targeted those eligible for VA benefits. Since then, we’ve continued to investigate mortgage lenders, including RMK.
The VA won’t advertise to you
Mike Frueh, Director of the VA Home Loan Program, had this to say about mortgage offers that represent themselves as coming from the VA:
“VA will never email or mail out solicitations for our loan program. VA does not endorse or sponsor any particular lender; instead, we work to ensure all Veterans and Servicemembers can safely use the benefit they’ve earned, at the lender of their choice. If you have any questions about your home loan benefit, please visit the VA website, or call VA at (877) 827-3702.”
Here’s what you can do
While we may not reduce the volume of your junk mail as a result of today’s action, we hope that we’ve called attention to a significant problem. Here’s how you can avoid being taken in by similar offers:
- Be a savvy consumer— look at everything an advertiser has to say about the product they’re selling. Today’s action involved a mortgage lender that placed flashy seals and logos front and center, but hid important disclosures in the fine print on the back of their ads.
- Get information from trusted sources — even if an ad is plastered in official-looking seals and impressive endorsements, check with a trusted source to learn all you can about the product being advertised. Learn more about VA loans and refinances. Ask CFPB also has answers to some common questions.
- Let us know about misleading ads— if you see an ad that looks deceptive or misleading, or just looks too good to be true, submit a complaint to us. We accept complaints about mortgages and other financial products marketed to veterans, such as consumer loans. Information you provide informs our work every day.
Continue Reading
Today, we’re releasing our third Snapshot of Complaints Received from Servicemembers, Veterans and their Families. The report details the data and trends from consumer complaints we’ve received from members of the military community since July 2011.
Here are just a few highlights:
- Debt collection complaints have continued to rise since our last report, and now make up 39 percent of total complaints. It is our largest category of complaints from the military community.
- Credit reporting remains a top category of concern. 72 percent of these complaints are about incorrect information on credit reports. This remains a significant issue for the military community, one that we highlighted earlier this year.
- Student loans are another concern. 49 percent of these complaints are about problems dealing with a lender or servicer. In these complaints, we continue to see long-standing trends, such as servicemembers complaining about not being provided their Servicemembers Civil Relief Act rights.
This year our report also highlights our outreach efforts that allowed us to connect with thousands of members of the military community, as well as three of our enforcement actions that recovered millions of dollars for affected consumers, primarily servicemembers, veterans, and their families. These figures represent the positive impact of the work we continue to do on behalf of those who serve.
Problems with account services
Basic account servicing stands out as a significant area of concern for servicemembers. Most consumers can call their financial institution, visit a branch, or connect online to try and get the help they need to maintain their account. Unfortunately, for military personnel and their families, the realities of military life, including deployments, frequent moves, and a high operational tempo, can sometimes make access to those services extremely challenging.
We found that servicemembers were often subject to a variety of account maintenance or penalty fees, as well as account-access restrictions, which were triggered due to aspects of their military service.
These problems raise concerns that financial institutions may not have a true understanding of the servicing needs of their military customers and may lack proper procedures and protections for them. Detailed examples of servicemember experiences can be found in Section II of the report.
Check out the snapshot to learn more.
We’re listening
As always, if you have a problem with a consumer financial product that you can’t resolve on your own; or if you know someone in that situation, please remember that you can submit a complaint online or by calling (855) 411-2372. We make your voice heard.
