Red Notice

In announcing the Trustmark case, Garland also revealed a new Justice Department program to tackle what he called the “modern day red line.” As part of the Combating Redlining Initiative, which will be managed by the Housing and Civil Law Enforcement section of the Civil Rights Division, will investigate violations in concert with states and other financial regulators , with a renewed emphasis on non-depository lenders. “We will spare no resources to ensure that federal fair loan laws are rigorously enforced,” the attorney general said.

The Trustmark case is just the tip of the proverbial iceberg. Since Biden took up residence in the White House, federal regulators have been particularly active in the mortgage arena. In one case, for example, the CFPB took action against the American Advisors Group for deceptive marketing of reverse mortgages. Actor Tom Selleck can trust AAG, but the government cannot.

According to an analysis by the Inside Mortgage Finance newsletter group, complaints about mortgage-related debts by seniors increased by more than a third in the first half of this year. Those having problems with their reverse loans increased 12.3%. And if the charges against AAG are money-based, it’s no wonder the complaints have increased so significantly.

In its marketing materials, the company said it “does everything possible to ensure that the information provided about the value of the home is reliable.” But the CFPB says that in fact AAG has made no attempt to do so. As a result, consumers were drawn into negotiations with the Irvine, Calif., Based company on the basis of inflated value.

Not only that, but the CFPB also said that AAG violated a 2016 administrative consent order that dealt with misleading company advertising. A proposed consent order would bar AAG from further illegal behavior and require the company to pay $ 173,400 in consumer redress and a civil fine of $ 1.1 million.

For what it’s worth, the IMF also reported that complaints against the three major credit reporting companies – Equifax, Trans Union and Experian – topped the list of complaints filed with the CFPB in the third quarter. Cries about credit reporting and credit repair services accounted for almost two-thirds of all complaints the agency received during the period.

Meanwhile, lenders must hope they haven’t done business with Critical Resolution Mediation or Seed Consulting to collect the overdue accounts. The two came under the eagle eye of the FTC, CRM because it posed as police officers and lawyers to threaten consumers with bogus debt – debt they didn’t have – and Seed for, among other things, the opening of several credit card accounts in the name of unwary. consumers. Remember the old adage: you are known by the company you keep.

In the case of Seed, the group pitched training companies as a way to get funds for people who wanted to start a business or become real estate investors. But according to the FTC’s complaint, rather than providing funds, the company charged people $ 3,000 or more to apply for multiple credit cards, a practice known as credit accumulation. He told consumers that they would earn enough after completing their training to pay off their cards, which they used to pay for the programs sold by the training companies.

Fly at night

This sort of thing is like the way real estate gurus sell their training programs; you know the ones who promise that you too can get rich quick by taking our training program and investing in our how-to manuals. It also reminds this writer of a certain so called college named after a former president who promised to teach you how he was successful in real estate. I’m not sure if TU actually used the tactics outlined above – he wasn’t charged with this crime so probably he wasn’t – but I’ve never seen a lesson on how to file for bankruptcy more than a few times. Ah, but I digress.

Speaking of the late night hawkers who feature many “successful investors” who have used their courses to get big results in real estate, the FTC has taken what it calls “a big step” to make it happen. ‘ensuring that these endorsements are on the rise and – by informing over 700 businesses, advertisers, retailers, etc., that statements should reflect the real experiences and opinions of real people. Any deceptive practice can be fined up to $ 43,792 per violation.

The FTC has sent a similar notice to for-profit higher education institutions, but the warning also applies to lenders, agents, brokers, and anyone else in the housing and mortgage industry who have used carriers. paid word. “False reviews and other forms of deceptive endorsements deceive consumers and undermine honest businesses,” said Samuel Levine, director of the FTC’s Office of Consumer Protection. “Advertisers will pay a price if they engage in these deceptive practices.”

The watchdog also recently updated its rules regarding the data guarantees that financial institutions must put in place to protect their customers’ data in the event of a breach or cyber attack. The Updated Safeguard Rule requires non-bank financial institutions such as mortgage brokers, motor vehicle dealers and payday lenders to develop, implement and maintain a comprehensive security system to protect their customer information. . Entities that collect information about consumers “have a responsibility” to protect it, Levine said.

At the same time, the FTC passed largely technical changes to its authority under a separate rule in the Gramm-Leach Bliley Act that requires financial institutions to notify customers of their information-sharing practices and allows customers to opt out of their information being shared with certain third parties. parties.

Duty officers are also subject to increased scrutiny. The OCC has sanctioned Cenlar, the second largest in the country, for “dangerous or unhealthy” practices that do not support the reach of its $ 900 billion subservice portfolio. Under the Consent Order, the New Jersey team cannot accept new contract clients with the explicit approval of the OCC.

The consent order, to which Cenlar voluntarily agreed, reads in part: “The bank failed to take timely corrective action to address its inadequacy and unsafe or unhealthy practices. The agency asked the Federal Savings Bank to develop efficient default operations and computer control programs, and the institution said it was working with the OCC to do so.

Even the Ministry of Housing and Urban Development and some states are mobilizing. And fintech lenders aren’t immune to scrutiny, either.

HUD struck a deal with the owner of an apartment complex in Phoenix who failed to provide adequate language services to a resident of Chad with limited English skills. The project receives funding from HUD, which said that “having access to important information relating to federally funded housing, such as details on application procedures and rental agreement terms, should not depend on fluency in English ”.

Meanwhile, New York has joined Illinois, and Massachusetts is subjecting non-custodians to state-imposed Community Reinvestment Act requirements. And Chicago-based Enova International said the CFPB was re-examining its payday and consumer lending business. In 2019, the company paid $ 3.2 million to settle with the CFPB after debiting some customers’ bank accounts without their authorization and failed to honor some approved credit extensions.