CFPB closes Majestic Home Loan because of misleading VA marketing practices

The Consumer Financial Protection Bureau has closed down RMK Financial Corporation (also known as Majestic Home Loan) for repeatedly using misleading marketing materials. The $1 million fine was also imposed by the government watchdog on the Ontario, California-based lender. Majestic Home Loan was closed by the CFPB after Majestic Home Loan violated a 2015 order. The lender was fined $250,000 for sending misleading advertisements to “tens to thousands of military families”. The flyers falsely claimed that the mortgage lender was affiliated with the Department of Veterans Affairs and the Federal Housing Administration.Despite the order, the practices have continued, CFPB’s Director Rohit Chopra said in a written statement Monday. Chopra stated that RMK continued to deceive military families by falsely implying government endorsement for its home loans, even after the 2015 law enforcement order. “Our action reflects the commitment of our team to eliminate repeat offenders and we are closing down this outfit. Majestic also allegedly deceived borrowers regarding interest rate and key terms, and falsely misrepresented loan repayments. The CFPB estimates that “millions” of advertisements were distributed by Majestic using the names and logos from the VA and FHA. This falsely implied that the ads were sent by the VA and FHA or that the company or advertised mortgage products were endorsed by or sponsored by the VA and FHA. The CFPB claims that this has caused harm to military families and violated the Consumer Financial Protection Act and the Mortgage Acts & Practices Advertising Rule, as well as the Truth in Lending Act. In a press release, the agency stated that this was “one of a series” of actions it will take to stop repeat offenders. The CFPB proposed a rule requiring nonbanks to report to the bureau any state or local court orders or judgements involving consumer financial products. This would allow the bureau to compile a database of violators. In addition, the CFPB also conducted many investigations into mortgage companies that used deceptive mailings to promote VA-guaranteed loans. The CFPB stated that more than $4.4 million in civil money penalties was collected as a result. RKM, which was established in 1997, laid off most of its employees via Skype in January and closed its doors on January 31 according to sources familiar with the matter. According to employees who were laid off, the lender’s announcement of closing its doors was unexpected. Employees were informed by company executives that the company was closing because of a “legacy problem.”