Majestic Home Loans has been banned from mortgage lending for allegedly claiming to be affiliated with the Veterans Affairs and Federal Housing Administration in its advertising.
The Consumer Financial Protection Bureau (CFPB) today permanently banned RMK Financial Corporation, which does business as Majestic Home Loans, from the mortgage lending industry.
In 2015, the CFPB issued an agency order against RMK for, among other things, sending advertisements to military families that led the recipients to believe the company was affiliated with the United States government.
Despite the 2015 order, the company engaged in a series of repeat offenses, including disseminating millions of mortgage advertisements to military families that deceptively used fake VA and FHA seals, CFPB said. In addition to the ban, RMK will also pay a $1 million penalty that will be deposited into the CFPB’s victims relief fund.
"Continued to lie to military families"
“Even after the 2015 law enforcement order, RMK continued to lie to military families by falsely implying government endorsement of its home loans,” said CFPB Director Rohit Chopra. “Our action reflects our commitment to weed out repeat offenders, and we are shutting down this outfit for good.”
RMK is a privately held corporation based in Ontario, California. RMK is a nonbank that is licensed as a mortgage broker or lender in at least 30 states and Puerto Rico. RMK originates consumer mortgages, including mortgages guaranteed by the VA and mortgages insured by the FHA. However, RMK is affiliated with neither government agency.
In 2015, the CFPB took action against RMK to end its use of deceptive mortgage advertising practices, including advertisements that led potential homebuyers to believe that the company was affiliated with the VA or FHA. RMK sent these deceptive advertisements to tens of thousands of military families as well as to other holders of VA-guaranteed mortgages. In addition to paying a fine, RMK was required to end its illegal and deceptive practices.
The CFPB has previously warned about VA home loan scams. Many service members, veterans, and military spouses receive fraudulent calls and mailers from companies claiming to be affiliated with the government, the VA, or their home loan servicer, CFPB charged.
Besides misleading military families about the advertisements, CFPB said that RMK
Deceived borrowers about interest rates and key terms: RMK’s advertisements illegally disclosed a simple annual interest rate more conspicuously than the annual percentage rate, illegally advertised unavailable credit terms, and used the name of the homeowner’s current lender in a misleading way.
Falsely misrepresented loan requirements and lied about projected savings from refinancing: RMK’s advertisements misrepresented that the benefits available to those who qualified for VA or FHA loans were time limited. Additionally, RMK’s advertisements misrepresented that military families could obtain VA cash-out refinancing loans without an appraisal and without incurring the cost of an appraisal, that an appraisal was not a condition of qualifying for VA cash-out refinancing loans, and that no minimum credit score and no income verification were required to qualify for VA cash-out refinancing loans.
Finally, RMK’s advertisements misrepresented the amount of monthly payments, the annual savings under the advertised loans, and the cash available in connection with the advertised loans.
Today’s action is one in a series of actions the CFPB is taking to halt repeat offenders, particularly those that violate agency and court orders. The CFPB recently proposed a registry to detect repeat offenders in the financial marketplace.