BCFP Settles Alleged CFPA Violations Against Mortgage Lender
The BCFP has settled a matter in which it alleged a mortgage lender used deceptive practices to mislead consumers by utilizing flawed Microsoft Excel formulas to illustrate refinance cost savings.
Specifically, the BCFP alleged the mortgage lender presented deceptive worksheets to consumers because the worksheets used flawed Microsoft Excel formulas that misrepresented the cost savings to the consumers of the refinanced loans by: (1) inflating the future amounts of principal owed under the existing mortgages by underestimating the proportion of the consumer’s existing monthly payments that are applied to principal; (2) underestimating the future amounts of the refinanced mortgages’ monthly payments by overestimating the loans’ terms; and (3) overestimating the total monthly benefits of the loans after the first month. The mortgage lender presented the worksheets as an “apples to apples” comparison between the consumers’ current mortgages and the mortgage lender’s proposed refinance mortgages. Since the Microsoft Excel formulas allegedly presented inaccurate results, the BCFP alleged that figures used in the worksheets and quoted to consumers were misleading.
The mortgage lender was ordered to: (1) submit a compliance plan to the Enforcement Director of the BCFP within 30 days of the effective date of the order that includes a proposal for training loan officers to ensure compliance with the Consumer Financial Protection Act; (2) pay redress in the amount of $268,869 to the affected consumers and submit a comprehensive redress plan; (3) pay a civil money penalty in the amount of $260,000; (4) provide a written compliance progress report within 90 days of the effective date of the order; and (5) create and keep for five years all documents and records necessary to demonstrate full compliance with the Order as well copies of all sales scripts, training materials, advertisements, website, and other marketing material relating to the subject of the Order.
The BCFP Complaint can be found here and the BCFP Order can be found here.
