The Consumer Financial Protection Bureau has ordered mortgage payment company Paymap Inc. to pay $33.4 million plus $5 million in fines for what the bureau has deemed deceptive advertisements around a mortgage payment program.
As part of the action, the CFPB has also ordered residential mortgage servicer LoanCare to pay a $100,000 civil penalty for its part in marketing with Paymap an “Equity Accelerator Program,” or an electronic payment system that allows borrowers to make mortgage payments automatically by way of direct debits from their bank accounts.
The program, according to the CFPB’s investigation, promised interest savings to consumers from more frequent mortgage payments in the measure of tens of thousands of dollars—amounts for which the CFPB says the claims had no factual basis.
Consumers were also misled about when their payments would be applied, the CFPB says, under the Consumer Protection Act’s prohibition against deceptive acts and practices.
Paymap, a Colorado based company, partnered with many mortgage servicers on marketing the program. It will return $33.4 million in fees to consumers as a result, and will pay a $5 million civil penalty to the CFPB.
“Deceptive advertising has no place in the financial marketplace,” said CFPB Director Richard Cordray. “Today’s action is delivering relief for consumers deceived by Paymap and LoanCare, and sending a clear message that these practices will not be tolerated.”
The action is not the first the CFPB has taken on deceptive advertising against mortgage companies. In February, the agency sued Maryland-based First Financial Services for deceptive reverse mortgage advertising. It also ordered forward lenders Flagship Financial Group and American Preferred Lending to end their false advertising at the same time.
In April, the CFPB ordered RMK Financial to pay $250,000 for deceiving borrowers with claims of government affiliation through its marketing of Federal Housing Administration and Veterans Affairs loans.
Written by Elizabeth Ecker