Go Direct lenders fined $ 150,000
Go Direct Lenders is licensed as a mortgage broker or lender in approximately 11 states. It offers and grants mortgages guaranteed by the United States Department of Veterans Affairs. The primary means of advertising Go Direct for VA guaranteed loans are direct mail advertisements sent primarily to military personnel and veterans.
The bureau found that Go Direct sent consumers numerous mailings for VA guaranteed mortgages that contained false, misleading and inaccurate statements or lacked required disclosures, in violation of the Consumer Financial Protection Act prohibition against deceptive acts and practices, mortgage laws and practices – Disclosure rule, and regulation Z. The consent order imposes requirements to prevent future violations.
For example, the Go Direct ads distorted the credit terms of the advertised mortgage loan by indicating credit terms the company was not actually prepared to offer to the consumer, including advertising a lower annual percentage rate. Go Direct also made false statements about the applicable fees in connection with the advertised mortgage.
In addition, the Go Direct ads misleadingly portrayed variable rate loans as “fixed” rate loans, when in fact the rate was adjustable and could increase over time. Go Direct advertisements stated or incorrectly implied that appraisal, assets and income documents were not required to qualify for certain loans and that consumers with FICO scores as low as 500 would be eligible for the advertised rates .
The Bureau also found that Go Direct’s advertisements falsely represented that it had records indicating that the value of the consumer’s property had increased over the past year by a specific percentage. Go Direct ads created the false impression that they were affiliated with the government by using words, phrases, images, or design features associated with the VA or the Internal Revenue Service. In addition, the Go Direct advertisements did not properly disclose, where Regulation Z requires, the credit terms for the advertised mortgage, such as the consumer’s repayment obligations over the life of the loan.
Today’s action is the third case arising from a Bureau sweep of investigations into several mortgage companies that use deceptive direct mail to advertise VA guaranteed mortgages. On July 24, 2020, the office announced consent orders against Sovereign Loan Group, Inc., and Prime Choice Funding, Inc., two California companies, for similar violations.
The consent order against Go Direct requires Go Direct to pay a civil fine of $ 150,000. The consent order also imposes an injunction to prevent future violations, including requiring Go Direct to strengthen its compliance functions by appointing an advertising compliance officer who must review its mortgage listings for compliance with laws on the mortgage advertising before use; prohibit false statements similar to those identified by the Bureau; and require Go Direct to comply with certain enhanced disclosure requirements in order to avoid future misrepresentation.