RMK Financial To Pay $250,000 To Resolve False Advertising Claim

Posted by Patrick Barnard on April 13, 2015 No Comments
Categories : Residential Mortgage

Mortgage lender RMK Financial Corp. will pay a $250,000 fine to resolve allegations brought by the Consumer Financial Protection Bureau (CFPB) that the company engaged in deceptive mortgage advertising practices.

According to the CFPB, California-based RMK, which also does business under the name Majestic Home Loans, mailed print advertisements to more than 100,000 consumers in several states, using the names and logos of the U.S. Department of Veterans Affairs (VA) and the Federal Housing Administration (FHA) in a way that falsely implied that the advertisements were sent by, or endorsed or sponsored by, the VA or FHA.

The ads were sent to tens of thousands of U.S. military service members and veterans, and other holders of VA-guaranteed mortgages, the CFPB says in a release.

The bureau says the ads for VA mortgages often featured the VA seal and logo at the top of the page and described the loan products as part of a ‘distinctive program offered by the U.S. government.’ The ad instructed consumers to call the ‘VA Interest Rate Reduction Department’ at a phone number that in fact belonged to RMK.

Other advertisements were labeled ‘FHA Benefits’ and included an image of the Statue of Liberty on the outside, along with warnings citing the U.S. Code and threatening fines and imprisonment for tampering with the letter, the CFPB says.

The ads also misrepresented the interest rates and estimated monthly payments on the loans, including whether the interest rate was fixed or variable.

RMK is also accused of misleading consumers who contacted the company by phone. The CFPB says some callers were given misleading information; for example, in some cases RMK employees told callers or implied that RMK was endorsed by the VA or FHA.

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