John Zasada, Compliance Consulting Director, Financial Institutions Group

On Sept. 1, 2020, the Consumer Financial Protection Bureau (CFPB) issued a 56-page consent order against Service 1st Mortgage, Inc. (Service 1st) for violating regulatory requirements including Regulation Z.  Service 1st is a mortgage broker and advertises through direct-mail pieces primarily sent to United States service members and veterans.  The Regulation Z advertising violations cited by the CFPB included the following:

  • Stated specific credit terms other than those terms that actually were or would be arranged or offered.
  • Stated the period of repayment or the amount of repayment, but failed to state the repayment obligations over the full term of the loan.
  • Stated a simple annual rate of interest, but did not include each simple interest that would apply and the period of time during which each simple interest would apply.
  • Stated the amount of a payment, but did not include the amount of each payment that will apply over the term of the loan, including any balloon payment, the period of time during which each payment would apply, and the fact that the payments do not include amounts for taxes and insurance premiums, if applicable, and that the actual payment obligation will be greater.
  • Advertisements, which were not sent by or on behalf of the consumer’s current lender, used the name of the consumer’s current lender and did not disclose with equal prominence the name of the person or creditor making the advertisement or include a clear and conspicuous statement that the person making the advertisement was not associated with, or acting on behalf of, the consumer’s current lender.

For more information on advertising compliance requirements, contact Doeren Mayhew’s regulatory compliance specialists.