OCC Orders The Federal Savings Bank to Correct Alleged Deceptive Loan Claims

The Office of the Comptroller of the Currency (OCC) issued a consent order against Chicago-based The Federal Savings Bank on April 2, requiring the bank to correct alleged deceptive acts or practices.

The OCC said in a Thursday (April 16) press release that it found that The Federal Savings Bank’s deceptive acts or practices “induced consumers to obtain cash-out refinance loans guaranteed by the U.S. Department of Veterans Affairs (VA) involving significant origination fees, increased interest rates, and increased monthly payments.”

These acts or practices violated Section 5 of the Federal Trade Commission Act, the regulator said in the release.

The Federal Savings Bank did not immediately reply to PYMNTS’ request for comment.

According to the consent order, the bank consented to the issuance of the order while neither admitting nor denying the OCC’s findings.

The OCC found that The Federal Savings Bank made false or misleading statements to consumers by advertising that consumers had “available funds” when in reality a new loan was required to access the funds; by indicating that the bank maintained a special relationship with the VA; and by creating the impression that the consumer’s interest rate or monthly payment would significantly decrease when in reality the cash-out refinance loan was a permanent loan with a fixed interest rate and mortgage payment, per the order.

“The Bank is taking corrective actions to remedy the deficiencies identified in this order,” OCC said in the consent order.

The order requires The Federal Saving Bank to provide written progress reports to the OCC, revise the corrective actions as required by the regulator, and undertake a process toward paying restitution to eligible consumers.

In other, separate actions announced in OCC’s Thursday press release, the regulator said that it issued orders of prohibition against a former associate banker at a JP Morgan Chase Bank branch for embezzling money from bank customer accounts and against a former associate banker at a BMO Bank branch for making unauthorized withdrawals from an elderly customer’s account.

The OCC also terminated a consent order against Carlinville, Illinois-based CNB Bank & Trust; a formal agreement with Seneca Falls, New York-based Generations Bank; and a consent order against Columbus, Ohio-based JPMorgan Chase Bank, per the release.