Service 1st Mortgage, Inc.
On September 1, 2020, the Consumer Financial Protection Bureau (Bureau) issued a consent order against Service 1st Mortgage, Inc. (Service 1st), a Maryland-based corporation that is licensed as a mortgage broker or lender in about 12 states. Service 1st offers and provides mortgage loans guaranteed by the United States Department of Veterans Affairs (VA). Service 1st’s principal means of advertising VA-guaranteed loans is through direct-mail campaigns sent primarily to United States military servicemembers and veterans. The Bureau found that since December 2015, Service 1st disseminated advertisements that contained false, misleading, and inaccurate statements or that failed to include 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. For example, Service 1st advertised specific credit terms, such as APRs and hypothetical payment amounts that it was not prepared to offer, or that it could only offer for an introductory period but advertised as if they were permanent loan terms. Service 1st also used terms that falsely represented or implied that Service 1st was affiliated with the government, including the VA. Service 1st also sent advertisements representing that a consumer could “[s]kip two payments” or “miss” two payments by refinancing with the company, but it did not disclose the limitations on this option, or that the skipped or missed payments would be added to the principal balance of the consumer’s loan. Its advertisements also falsely stated: “the Economic Stimulus Program will end soon. There is currently no plan to extend the Stimulus Program.” Finally, many Service 1st advertisements included claims or terms that require additional disclosures, but Service 1st failed to make these disclosures. The consent order requires Service 1st to pay a $230,000 civil money penalty and imposes requirements to prevent future violations.
This action stems 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.; on August 21, 2020, the Bureau announced a consent order against Go Direct Lenders, Inc.; on August 26, 2020, the Bureau announced a consent order against PHLoans.com, Inc.; and earlier today, the Bureau announced a consent order against Hypotec, Inc., for similar violations. The Bureau commenced this sweep in response to concerns about potentially unlawful advertising in the market that the VA identified.