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HousingWire Magazine: December 2021/ January 2022

AS WE ENTER A NEW YEAR, let’s look at some of the events that we can look forward to in 2022. But what about what’s next for the housing industry?

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Politics & MoneyMortgage

CFPB continues to bring actions against mortgage companies targeting veterans with deceptive ads

The Bureau has issued six consent orders this summer

The Consumer Financial Protection Bureau issued a consent order against two companies on Tuesday following recent investigations of mortgage companies that use deceptive mailers to advertise loans guaranteed by the United States Department of Veterans Affairs. Those investigations have resulted in actions against six companies this summer.

The most recent cases were those against Service 1st Mortgage, Inc., and Hypotec Inc., which found the companies had sent consumers numerous mailers for VA-guaranteed mortgages that contained false, misleading, and inaccurate statements or that lacked required disclosures. In the case of Service 1st Mortgage, the misleading mailers were sent out for a period beginning in 2015, and for Hypotec, beginning in 2016.

According to the CFPB, Service 1st Mortgage and Hypotec advertised specific credit terms, such as interest rates, APRs, and hypothetical payment amounts that they were not prepared to offer, or that they could only offer for an introductory period but advertised as if they were permanent loan terms.

“Service 1st also sent advertisements between December 2015 and April 2017 representing that a consumer could “[s]kip two payments” or “miss” two payments by refinancing with the company, but it did not disclose the limitations on this option, or that the skipped or missed payments would be added to the principal balance of the consumer’s loan,” the release said.

On Aug. 26, the CFPB settled with PHLoans, Inc., for advertisements that stated credit terms that the company was not actually prepared to offer to the consumers, among other deceptive practices.

On July 24, the CFPB announced consent orders against Sovereign Lending Group, Inc., and Prime Choice Funding, Inc., and on Aug. 21 against Go Direct Lenders, Inc., for similar violations. Each settlement included requirements for various civil money penalties and conditions imposed to prevent future violations and bolster compliance functions.

According to a 2019 report from the Federal Trade Commission, since 2015 the FTC has received 163,000 fraud reports from military retirees and veterans, as well as 13,000 from active duty servicemembers and 3 million from civilians. Retirees and veterans experienced the highest average loss due to fraud at $950 – 23% higher than current servicemembers – and 44% higher than that for other civilians.

VA loans may need protection now more than ever as a recent report on Department of Veterans Affairs data revealed VA loans rose 114% through the first three quarters of fiscal year 2020 compared to the same period last year.

According to the report, a surge in VA refinance loans is driving the increase, with Q3 refinances spiking 296% year-over-year, compared to purchase loans gaining 7% from the previous year. Millennials led the pack for VA refinances with a 463% jump year over year.

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