The CFPB announced on Feb. 12, 2015 another consent order for issues involving a lender mortgage origination advertising practices. Flagship Financial Group, LLC was alleged to have made material misrepresentations in commercial communications that improperly suggested that Flagship Financial was affiliated with a United States government entity and Flagship made material misrepresentations that it was endorsed or sponsored by a governmental program. This consent order is very similar to the American Preferred Lending consent order.
The Consumer Financial Protection Bureau alleged that Flagship disseminated advertisements promoting FHA streamline refinance loans and that the format & design of these advertisements looked like a government notice and implied that a governmental agency was the source of the advertisement.
The FHA streamline refinance mailers contained the heading “PURSUANT TO THE FEDERAL HOUSING ADMINISTRATION (FHA) HUD No. 12-045,” and “United States Housing and Urban Development 12-045 Program,” and instructed consumers to call their “assigned FHA loan specialist.” Flagships name appeared only on the back of the FHA streamline advertisement mailers in the disclaimer section that Flagship was not an agency of the federal government and wasn’t affiliated with the borrower’s current lender.
The CFPB also said Flagship disseminated advertisements which promoted VA guaranteed loans which included the text “HUD-Approved Flagship Financial Group has been directed to…,” “Benefits Department,” and “VETERANS BENEFITS IMPROVEMENT ACT Passed by Congress and signed into law by the President.” The consent order said “the statements that the company “has been directed to” provide loans with certain features, in combination with the references to federal legislation and the references to the “Benefits Department,” imply that the Company has a specific and unique relationship with a government agency.”
Flagship also described themselves as a HUD-Approved Lender but it has surrendered that approval in March of 2011. This description was inaccurate & misstated according to the CFPB because they were not approved yet they disseminated this message to over one million consumers.
Flagship agreed to pay $225,000 dollars and institute a comprehensive compliance plan which is to be designed to ensure that their advertising practices comply with all applicable federal consumer financial laws.
The CFPB also further ordered that Flagship shall create for at least 5 years the following business records:
1. All documents and records necessary to demonstrate full compliance with each provision of the consent order;
2. Copies of all advertisements including any such materials used by a third party on behalf of Flagship;
3. Records showing, for each service provider providing services related to direct mail marketing, the name of a point of contact, and that person’s telephone number; email, physical postal address; job title or position; dates of service, and, if applicable, the reason for termination.