The Federal Deposit Insurance Corporation (FDIC) today announces a settlement with Bank of England, England, Arkansas, for violations of Section 5 of the Federal Trade Commission Act (Section 5), the Real Estate Settlement Procedures Act (RESPA), the Fair Credit Reporting Act (FCRA), and the Home Mortgage Disclosure Act (HMDA).  The bank has stipulated to the issuance of an Order to Pay Civil Money Penalty (CMP) in the amount of $1.5 million.  In addition, nine former employees of the Bank of England have stipulated to individual enforcement actions.  Based on the FDIC’s findings, the bank made $1.9 million in remediation to over 900 harmed consumers.

“Veterans and their families who were deceived into refinancing their VA loans were overcharged and did not receive the loan products promised, resulting in significant consumer harm,” said FDIC Division of Depositor and Consumer Protection Director Mark Pearce. “Today's announcement demonstrates FDIC's commitment to ensuring consumers are treated fairly, and that those responsible, including the bank and individuals employed by the bank, are held accountable for their illegal actions.”  

Section 5 prohibits banks from engaging in unfair or deceptive acts or practices.  The FDIC determined that the bank, through one of its loan production offices (LPOs), violated Section 5 by misrepresenting to consumers that they would be able to skip multiple loan payments when refinancing a Department of Veterans Affairs (VA) mortgage loan.  The FDIC also determined that loan officers’ or LPO’s misrepresented to consumers their relationship with the VA.  

Section 8(a) of RESPA prohibits giving or accepting a thing of value in exchange for the referral of settlement service business.  RESPA was enacted to enable consumers to better understand the home purchase and settlement process and, where possible, to reduce settlement costs.  The FDIC determined the bank entered into certain co-marketing arrangements and marketing service agreements in which the bank and real estate brokers agreed to market their services together using online platforms.  Further, the bank also entered into desk rental agreements whereby the bank rented space from realtors, and entered into agreements with online/digital platforms for lead generation.  These arrangements and agreements resulted in the payment of fees by the bank to real estate brokers and online/digital platforms for their referrals of mortgage loan business, in violation of REPSA.  Lastly, the FDIC determined the bank brokered certain reverse mortgage loans where broker fees made to the bank constituted things of value provided in return for loan referrals in violation of RESPA Section 8.  

The FDIC also determined that the bank failed to provide consumers with firm offers of credit and required disclosures as required by the FCRA, and the bank failed to report accurate data on its 2021 loan application register in violation of HMDA.

In addition to the settlement with the bank, the FDIC also announces settlements with nine former employees of one of the bank’s LPOs for violations of Section 5 associated with deceptive and unfair practices involving VA refinance loans by: (1) luring consumers to apply for mortgage loans with low, unavailable loan prices that would not be honored and then subsequently increasing the price before closing the loan; (2) misrepresenting that consumers could skip two months of their mortgage payments; and (3) misrepresenting the LPO’s affiliation with the VA. These nine settlements include, but are not limited to, the following:

• Ryan Qarana, Assistant Branch Manager:  Stipulated to a Prohibition Order and Order to Pay CMP in the amount of $100,000 for violations of Section 5 and engaging or participating in unsafe or unsound practices.
• Jasmine Jonna, Sales Manager:  Stipulated to a Prohibition Order and Order to Pay CMP in the amount of $12,000 for violations of Section 5 and engaging in unsafe or unsound practices.
• Zack Jabro, Branch Manager:  Stipulated to an Order to Pay CMP in the amount of $110,000 for engaging in unsafe and unsound practices.

In addition to the CMP, the FDIC issued a Consent Order that requires the bank to take affirmative steps to ensure a Compliance Management System that effectively identifies, addresses, monitors, and controls consumer protection.