State officials have settled two false advertising cases involving mortgage firms, requiring the companies to pay more than $200,000 in fines and costs.
The Department of Financial Institutions alleged that Linden Home Loans and Assurity Financial Services engaged in deceptive radio and direct mail advertising campaigns. Both firms were previously charged with false advertising.
In charges filed last December, Linden Home Loans of Kirkland, Wash., a licensed mortgage broker, and its two owners, Christopher Opdyke and Mark Sullivan, were accused of bait and switch advertising.
Rather than contest the charges, the two agreed to pay a $75,000 fine and $4,000 in costs. Opdyke and Sullivan, who did not admit to any wrongdoing, further agreed their licenses to conduct business in Washington would be suspended for 30 days. Linden Home Loans voluntarily surrendered its mortgage broker license on July 7.
Investigators said that Linden Loans, LLC of Kirkland, a licensed mortgage broker, billed itself on television as the "Home of the 1% Mortgage."
A DFI investigation revealed that though Linden promised consumers residential mortgage loans at "1% interest, with no points and no fees," not one borrower actually received those terms in 2006 or 2007.
On March 5, Assurity Financial Services of Englewood, Colo., a licensed consumer loan company, and its two owners, Calvin and Troy Hamler, were charged with engaging in a deceptive direct mail solicitation campaign.
In this case, rather than contest the charges, the Hamlers agreed to pay a $250,000 fine, with $125,000 paid and $125,000 suspended, plus $5,000 in costs.
The Hamlers, who also did not admit to any wrongdoing, further agreed that if they fail to comply with terms of the settlement, the balance of the fine would be imposed and they would be banned from the consumer loan industry for five years.
According to state regulators, Assurity Financial Services, LLC was licensed as a consumer loan company in Washington. Starting in December of 2007, the Colorado-based lender mailed thousands of solicitations to Washington homeowners who have federally-insured loans, and more recently to consumers with adjustable rate mortgages.
The mailers offered the possibility of hundreds or thousands of dollars in refunds; many of the mailers appeared to be sent from the federal government. In small print in a footnote, Assurity disclosed the primary purpose of the mailer—to solicit the recipient for a home loan.
Director of DFI's Division of Consumer Services Deb Bortner said that both firms immediately suspended their advertising campaigns when the charges were filed.
"Stopping false mortgage advertising in Washington is a high priority for the Division," Bortner said. "Our settlement with Assurity Financial will ensure that future advertising by the firm will comply with both the letter and the spirit of Washington law."
Agency Director Scott Jarvis said false advertising is his priority.
"These cases resulted from regular, on-going reviews of mortgage advertising," Jarvis said. "The penalties imposed in these cases demonstrate that we are serious about assuring truth in advertising, and that businesses offering mortgage loans to Washington consumers will pay the price for false and deceptive advertising."
In the Department's third case related to truth in advertising, DFI filed charges July 22 against Paramount Equity Mortgage, Inc., of Roseville, Calif. The firm is accused of engaging in a number of deceptive lending practices, including false advertising. The investigation is ongoing.
The Washington State Department of Financial Institutions regulates a variety of financial service providers such as banks, credit unions, mortgage brokers, consumer loan companies, payday lenders, and securities brokers and dealers.
In addition to posting information about licensees and administrative actions, the DFI's Website features consumer tips on a variety of financial fraud-related topics.
The mission of the Division of Consumer Services is to protect consumers from illegal and fraudulent lending practices. The division accomplishes its mission through licensing, licensee examinations, investigations, and enforcing selected state and federal statutes and rules.
The Division is entirely self-supporting, with funding provided by licensing, auditing, and policing of regulated businesses and individuals. No money is received from the state General Fund or other public revenue source.