WASHINGTON, D.C. – Today, the Consumer Financial Protection Bureau (Bureau) issued a consent order against PHLoans.com, Inc. (PHLoans), a California corporation that is licensed as a mortgage broker or lender in about 11 states. Until at least April 2019, PHLoans was known as Pacific Home Loans, Inc. PHLoans offers and provides mortgage loans guaranteed by the United States Department of Veterans Affairs (VA). PHLoans’s principal means of advertising VA-guaranteed loans is through direct-mail advertisements sent primarily to United States military servicemembers and veterans. The Bureau found that PHLoans sent consumers numerous mailers for VA-guaranteed mortgages that contained false, misleading, and inaccurate statements or that lacked required disclosures, in violation of the Consumer Financial Protection Act’s (CFPA) prohibition against deceptive acts and practices, the Mortgage Acts and Practices—Advertising Rule (MAP Rule), and Regulation Z. The consent order requires PHLoans to pay a civil money penalty and imposes requirements to prevent future violations.
Today’s action is the fourth case stemming from a Bureau sweep of investigations of multiple mortgage companies that use deceptive mailers to advertise VA-guaranteed mortgages. On July 24, 2020, the Bureau announced consent orders against Sovereign Lending Group, Inc., and Prime Choice Funding, Inc., and on August 21, 2020, the Bureau announced a consent order against Go Direct Lenders, Inc., for similar violations. The Bureau commenced this sweep in response to concerns about potentially unlawful advertising in the market that the VA identified. Accurate and legally compliant advertising provides consumers with valuable information about the different types of mortgages and terms available so they can effectively shop for products that best meet their needs. This ongoing sweep of investigations reflects the Bureau’s commitment to enforcing the laws that ensure the financial marketplace is fair and accurate for all consumers, including servicemembers, veterans, and surviving spouses whom VA-guaranteed mortgages are designed to benefit.
The Bureau found that PHLoans disseminated advertisements that contained false, misleading, and inaccurate statements or that failed to include required disclosures. For example, PHLoans advertisements misrepresented the credit terms of the advertised mortgage loan by stating credit terms that the company was not actually prepared to offer to the consumer, including misrepresenting the payment amount applicable to the advertised mortgage and the nature or amount of cash available to the consumer in connection with the advertised mortgage. PHLoans also made misrepresentations about the existence and amount of fees or costs to the consumer in connection with the advertised mortgage. The Bureau also found that PHLoans advertisements failed to properly disclose, when required by Regulation Z, credit terms for the advertised mortgage, such as the consumer’s repayment obligations over the full term of the loan.
The consent order against PHLoans requires PHLoans to pay a civil penalty of $260,000. The consent order also imposes injunctive relief to prevent future violations, including requiring PHLoans to bolster its compliance functions by designating an advertising compliance official who must review its mortgage advertisements for compliance with mortgage advertising laws prior to their use; prohibiting misrepresentations similar to those identified by the Bureau; and requiring PHLoans to comply with certain enhanced disclosure requirements to prevent future misrepresentations.
The Consumer Financial Protection Bureau (CFPB) is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit www.consumerfinance.gov.