A mortgage company deceptively targeted veterans in selling its services, falsely claiming to be affiliated with the U.S. government and misrepresenting facts about its interest rates and payments, according to the real U.S. government.
The Consumer Financial Protection Bureau on Thursday ordered RMK Financial Corporation, which does business as Majestic Home Loan, to cease the misleading practices and pay a civil penalty of $250,000.
“Deceptive advertising has no place in the mortgage marketplace, and the Consumer Bureau will continue to take action against companies that mislead consumers with false claims of government affiliation,” CFPB Director Richard Cordray said in a news release. “Today’s action sends a clear message that misleading consumers is illegal, unacceptable, and will not be tolerated.”
According to the bureau, the mortgage lender mailed advertisements to more than 100,000 consumers — many of them active or retired military members — using the names and logos of the Department of Veterans Affairs and the Federal Housing Administration “in a way that falsely implied that the advertisements were sent by the VA or FHA.”
The ads were sent to current holders of VA-guaranteed mortgages.
The ads instructed potential customers to call the “VA Interest Rate Reduction Department,” which was actually a number for RMK Financial.
Some of the mailers were labeled with the words “FHA Benefits,” included an image of the Statue of Liberty on the outside and contained language citing the U.S. legal code and threatening fines and imprisonment for tampering with the letter, the bureau said.
The company’s ads also allegedly contained misleading information about interest rates on its loans, including how much monthly payments would be.
Majestic Home Loan did not immediately return an email message seeking comment for this story.
Under a consent order filed by the bureau, California-based RMK will be prohibited from implying that it has any government affiliation in future advertisements and will pay $250,000 in penalties.
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