The Enforcement Unit has recently received a concerning number of complaints relating to deceptive mortgage refinance advertisements and deceptive sales practices. Several complaints are from veterans relating to VA refinance offers. The issues identified in these complaints include representations about interest rates and reductions in monthly payments that are misleading and, in some instances, are not actually available to the consumer.
Specific Risks to Veteran Consumers
Other recent complaints include sales practices where companies appear to be offering veterans VA Interest Rate Reduction Loans (IRRL), yet the consumers are not eligible. Alarmingly, some consumers have been told to skip making mortgage payments while the company is completing the refinance. Ultimately, the consumers were not eligible for the refinance and then became delinquent on their mortgage payments.
Regulatory Compliance and Enforcement
The Enforcement Unit reminds licensees that deceptive and misleading advertising and sales practices are prohibited under the Consumer Loan Act. Advertising an interest rate that is not actually available to entice a consumer to respond is a prohibited practice. The VA also prohibits lenders from advertising or advising consumers to skip payments as a benefit of a VA IRRL.
The Enforcement Unit may bring enforcement action to order practices like this to be stopped and may order restitution to consumers because of such practices. Companies may benefit from reviewing their current advertising approval policies and procedures and should consider additional training for MLOs regarding these issues.
Recordkeeping and Use of Personal Devices
The Enforcement Unit has also recently received complaints related to loan originations where companies are unable to produce records because the MLOs involved have used personal email accounts or personal cell phones for communications related to the loan origination. Licensees are responsible for retaining records related to the loan file as outlined in WAC 208-620-520. Licensees may wish to review their policies, procedures, and training for MLOs to ensure record keeping and data security requirements are followed for all methods of communication with borrowers.