Commercial Investors, Inc

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IN THE MATTER OF COMMERCIAL INVESTORS, INC., ET AL.

CONSENT ORDER, ETC., IN REGARD TO ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION AND TRUTH IN LENDING ACTS /Jacket C-2668. Complaint, May 197. Decision, May, 1975 Consent order requring a Hampton, Va., loan broker, among other things to cease violating the Trth in Lending Act hy failing to disclose to consumers, in connection with the extension of consumer credit, such infonnation a., required by Regulation Z of the said Act.

Appearances For the Commission: Bernllrd Rowtz, Ali.ce C. Kellehe and Thmr J. Keary.

For the respondents: Philip L. Avi Newprt News, Va. 860 EDF:RAL TRADE COMMISSION DECISIONS Complaint 85 F.

COMPLAINT Pursuant to the provisions of the Federal Trade Commssion Act and of the Trth in Lending Aet and the implementing regulation promulgated thereunder, and by virtue of the authority vested in it by said Acts, the Federal Trade Commission, having reason to believe that Commercial Investors, Ine., a corporation, Virginia Mortgage and Loan Assoeiation, Ine., a corporation, and John L. Lane, .Jr., individually and as an officer of said corporations, hereinafter sometimes referred to a.-, respondents, have violated the provisions of said Acts, and the implementing regulation promulgated under the Trth in Lending Act and it appearing to the Commission that a proceeding by it in respect thereof would be in the puhlie interest, hereby issues its complaint stating its charges in that respect as follows: P ARAGRAPIi 1. Respondent Commercial Investors, Ine., is a corprdtion organized, existing and doing business under and by virtue of the laws of the Commonwealth of Virginia with its principal offee ' and place of business located at 200 Keeoughtan Rd., Hampton, Va. Said respondent controls and dominates the acts and pmctiees of respondent Virginia Mortgage and Loan Association, Ine., a whollyowned subsidiar which is a corporation organized, existing and doing business under and by virtue of the laws of the Commonwealth of Virginia with its principal offee and place of business located at 200 Keeoughtan Rd., Hampton, Va.

Respondent ,John L. Lane, Jr. is an offeer of the corporate respondents. He formulates, directs and controls the acts and praetiees of the corporate respondents inelu(ling the acts and practices hereinafter set forth. His address is the same as that of the eorprate respondents.

AIl of the aforementioned respondents cooperate and act together in the carring out of the acts and practices hereinafter set forth. PAR. 2. Respondents are now, and for some time last past have been, engaged as brokers in the armnging and seeurg of loans for the general public.

PAR. 3. In the ordinary eoure and conduct of their business as aforesaid, respondents regularly arrnge for the extension of consumer credit, as uconsumer credit" is defined in Regulation Z, the implementing regulation of the Trth in Lending Act, duly promulgated by the Board of Governors of the Federal Reserve System. PAR. 4. Subsequent to July 1, 1969, in the ordinar course of business as aforesaid, respondents' customers are provided with consumer credit cost disclosure statements.

COMMJ.RCIAL INVJ. TOIt, INC., 1'1' AL.

859 Decision and Order By and through the use of the aforesaid consumer credit east disclosures respondents;

1. Fail to inelude the broker s fee or finder's fee in the determination of the finance charge, as required by Seetion 226.4(a)(3) of Regulation Z.

2. Fail to disclose the broker's fee or finder's fee as a prepaid finance charge, as required by Seetion 226.8(e)(1) of Regulation Z, using the term "prepaid finance charge " as required by Seetion 226.8(d)(2) of Regulation Z.

3. Fail to itemize the components of the finance charge, as required by Section 226.8(d)(3) of Reguation Z.

4. Fail to disclose aeeurately the annual percentage rate computed in accordanee with Seetion 226.5(b) of Regulation Z, as required by Section 226.8(b)(2) of Regulation Z.

5. Fail to print the tcnns "finance charge" and "annual percentage rate" more eonspieuously than other termnology, as required by Section 226.6(a) of Regulation Z.

6. Fail to disclose clearly the method of eomputing any unearned portion of the finance charge in the event of prepayment of the obligation, as required by Section 226.6(a) of Reguation Z. 7. Fail to identify the broker as a creditor, as "ereditor" is defined in Section 226.2(m) of Reguation Z, as required by Section 226.6(d) of Reguation Z.

8. Fail to make full consumer eredit cost disclosures before the transaction is eonsunated, as required by Seetion 226.8(a) of Regulation Z.

PAR. 5. Pursuant to Section 103(q) of the Trth in Lending Act respondents' aforesaid failures to comply with the provisions of Regulation Z constitute violations of the Act and, puruant to Seetion 108 thereof, respondents have thereby violated the F'ederal Tr'Jde Commission Aet.

DECISION AN ORDER The Commission having heretofore determined to issue its complaint charging the respondents named in the caption hereto with violation of the Federal Tre Commission Act, and the respondents having been served with notice of said determination and with a copy of the complaint the Commssion intended to issue, together with a proposed form of order; and The respondents and counsel for the Commssion having thereafter executed an agreement contaning a consent order, an admission by the respondents of all the jursdictional facts set forth in the complaint to issue herein, a statement that the signg of said agreement is for , .

Decision and Order 85 VT. settement purposes only and does not constitute an admission by respondents that the law has been violated as alleged in such complaint and waivers and other provisions as required by the Commssion rules; and The Commission having considered the agreement and having provisionally accepted same, and the agreement containing eonsent order having thereupon been placed on the public record for a period of sixty (60) days, now in further conformity with the procedure prescribed in Section 2.34(b) of its rules, the Commission hereby issues its complaint in the form contemplated by said agreement, makes the following jursdictional findings, and enters the following order: I. Respondent Commercial Investors, Ine., is a eorpration organ ized, existing and doing business under and hy viue of the laws of the Commonwealth of Virginia, with its offee and principal place of business located at 200 Keeoughton Rd., Hampton, V,, Said respondent controls and dominates the acts and praetiees of respondent Virginia Mortgage and Loan Assoeiation, Ine., a wholly owned subsidiar which is a corporation orgaized, existing and doing business under and by virtue of the laws of the Commonwealth of Virginia with its offee and prineipa. place of business located at 200 Keeoughtan Rd., Hampton, Va.

Respondent John L. Lane, Jr. is an offeer of the corporate respondents. He formulates, directs and controls the acts and practices of the corporate respondents including the acts and practices herein after set forth. His address is the same as that of the corporate respondents.

2. The Federal Trde Commission has jursdietion of the subject matter of this proceeding and of the respondents, and the proceeding is in the public interest.

ORDER It is ordered That respondents Commercial Investors, Ine., a corporation, its successors and assigns, and its officers, and Virginia Mortgage and Loan Association, Inc., a corpration, its successors and assigns, and its officers, and John L. Lane J r., individualy and as an officer of said corprations, and respondents' agents, representatives and employees, diectly or through any corpration, subsidiar, division or other device, in connection with any extension or argement for the extension of consumer credit or advertisement to aid, promote or assist, directly or indirectly, any extension or arngement for the extension of consumer credit, as "consumer credit" and advertisement" are defined in Reguation Z (12 C. R. 226) of the ), \.ULYllnr,I\\.Ll1.u U'l v r.';1UI\';, 11'1"-., 1.1 ./\1,. 859 Decision and Order Truth in Lending Act (Pub.L. 90-321, 15 U.S.c. 91601 et seq. forthwith cease and desist from:

1. Failing to include the broker s fee or finder's fee in the detennination of the finance charge, as required by Section 226.4(a)(3) of Regulation Z.

2. Failing to disclose the broker's fee or finder's fee as prepaid finance charge, as required by Section 226.8(e)(1) of Regulation Z, using the tenn "prepaid finance charge " as required by Seetion 226.8(d)(2) of Reguation Z.

. Failing to itemize the components of the finance charge, as required by Section 226.8(d)(3) of Regulation Z. 4. Failing to disclose accurately the anual percentage rate computed in aeeordanee with Section 226.5(b) of Regulation Z, as required by Seetion 226.8(b)(2) of Regulation Z. 5. Failing to print the term "finance charge" and "annual percentage rate" more eonspieuously than other termnology, as required by Section 226.6(a) of Reguation Z. 6. Failing to disclose clearly the method of eomputing any unearned portion of the finance charge in the event of prepayment of the obligation, as required by Section 226.6(a) of Reguation Z. 7. Failing to identify the broker as a creditor, as "ereditor" is dermed in Section 226.2(m) of Regulation Z, as required by Section 226.6(d) of Reguation Z.

8. Failing to provide the borrower complete consumer eredit cost disclosures before eonsumtion of the transaction, as required by Section 226.8(a) of Regulation Z.

to 9. Failing, in any consumer credit traaction or advertisement, make all disclosures, determed in accordance with Sections 226.4 and 226.5 of Regulation Z, in the maner, form and amount required by Seetions 226. , 226. , 226.9 and 226.10 of Reguation Z. It is furthered orrkred That respondents prominently display no less than two signs on the premises which will clearly and conspicuously state that a customer must receive a complete copy of the consumer credit cost disclosures, as required by the Truth in Lending Aet, in any transaction which is financed, before the transaction is consummated. It is further ordeed That the respondent eorprations shal forthwith distribute a copy of this order to each of their operating divisions.

It is further ored That respondents notify the COnmssion at least thirty (30) days prior to any proposed change in the eorprate respondents such as dissolution, assignment or sale resulting in the emergence of any successor corporations, the creation or dissolution of Order 85 F.

subsidiaries or any other change in the corporations which may affect eomplianee obligations arising out of the order. It is further ordered That respondents deliver a copy of this order to cease and desist to all present and future personnel of respondents engaged in the arranging for the extension of consumer eredit and that respondents secure a signed statement acknowledging receipt of said order from each such person.

It is further ordered That the individual respondent named herein promptly notify the Commission of the diseontinuanee of his present business or employment and of his affiliations with a new business or employment. Such notice shall include respondent's eurent business addresses and a statement as to the nature of the business or employment in which he is engaged as well as a description of his duties and responsibilities.

It is further ordeed That the respondents herein shall within sixty ((iO) days after servee upon them of this order, fie with the Commission a report, in wrting, setting forth in detal the manner and form in which they have eomplied with this order.