All Financial Services, LLC

Agency: Consumer Financial Protection Bureau
Date: Feb. 2015
Type: enforcement action
Source: consumerfinance.gov/enforcement/actions/all-financial-services/
Pages: 41
PDFs: 2 documents (links below)

Documents in this case

Stipulation · 10 p.
Complaint · Feb. 2015 · 30 p.

Case summary

CFPB took against three reverse mortgage lenders, All Financial Services, Flagship Financial Group and American Preferred Lending for misleading consumers with advertisements implying U.S. government approval of their products.

On 10/22/15 the Stipulated Final Judgment and Order, signed by Magistrate Judge Gesner, was entered. No accompanying press release.

Stipulation

PDF of this document (10 pages)

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND

BALTIMORE DIVISION CONSUMER FINANCIAL PROTECTION BUREAU Plaintiff, Case No. 15-cv-420-BPG

ALL FINANCIAL SERVICES, LLC

Defendant.

STIPULATED FINAL JUDGMENT AND ORDER

The Consumer Financial Protection Bureau (“Bureau”) commenced this civil action against Defendant on February 12, 2015 to obtain injunctive relief, a monetary penalty, and other relief.

The Complaint alleges that Defendant's advertising activities violated the Mortgage Acts and Practices Rule, 12 C.F.R. pt. 1014 (2011) (Regulation N), and the deceptive acts and practices prohibition in the Consumer Financial Protection Act of 2010 (CFPA), 12 U.S.C. §§ 5531(a), 5536(a)(1)(B).

Plaintiff and Defendant have requested that the Court enter this Stipulated Final Judgment and Order (“Order”).

FINDINGS l. This Court has jurisdiction over the parties and the subject matter of this action.

3: Venue is proper in this District.

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3: Plaintiff and Defendant agree to the entry of this Order, without adjudication of any issue of fact or law, to settle and resolve all matters in this dispute arising from the conduct alleged in the Complaint to the date this Order is entered.

4, Defendant neither admits nor denies any allegation in the Complaint, except that Defendant admits the facts necessary to establish the Court’s jurisdiction over Defendant and the subject matter of this action.

3s Defendant waives all rights to seek judicial review or otherwise challenge or contest the validity of this Order. Defendant also waives any claim it may have under the Equal Access to Justice Act, 28 U.S.C. § 2412, concerning the prosecution of this action to the date of this Order. Each party will bear its own costs and expenses, including without limitation attorneys’ fees.

6. Entry of this Order is in the public interest.

DEFINITIONS

(2 The following definitions apply to this Order:

a. “Defendant” means All Financial Services, LLC and its successors and assigns. b. “Effective Date” means the date on which the Order is entered. C. “Enforcement Director” means the Assistant Director of the Office of

Enforcement for the Consumer Financial Protection Bureau, or his/her delegee. d. “Person” means any individual, group, unincorporated association, limited or general partnership, corporation, or other business entity. . “Related Consumer Action” means a private action by or on behalf of one or

more consumers or an enforcement action by another governmental agency

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brought against Defendant based on substantially the same facts as described in this Order or the Complaint.

f. ‘Relevant Period” includes the period from November 5, 2011 to December 28, 2012.

ORDER IT IS ORDERED that:

I. Conduct Provisions 8. For 5 years from the Effective Date, the Defendant and its officers, agents, servants, and employees who have actual notice of this Order, whether acting directly or indirectly, may not violate and must take reasonable measures to ensure that its service providers, and other agents do not violate Regulation N, 12 C.F.R. pt. 1014, and sections 1031(a) and 1036(a)(1)(B) of the CFPA, 12 U.S.C. §§ 5531(a), 5536(a)(1)(B), in connection with the advertising, marketing, promotion, offering for sale, or sale of mortgage credit products.

Il. Compliance Plan 9, Within 30 days of the Effective Date, Defendant must submit to the Enforcement Director for review and determination of non-objection a comprehensive compliance plan designed to ensure that Defendant’s mortgage credit product advertisements comply with all applicable Federal

consumer financial laws and the terms of this Order (Compliance Plan).

10. The Compliance Plan must include, at a minimum: a. Detailed steps for addressing each action required by this Order; and b. Specific timeframes and deadlines for implementation of the steps

described above.

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11. The Enforcement Director will have the discretion to make a determination of nonobjection to the Compliance Plan or direct the Defendant to revise it. If the Enforcement Director directs the Defendant to revise the Compliance Plan, the Defendant must make the revisions and resubmit the Compliance Plan to the Enforcement Director within 30 days.

12. After receiving notification that the Enforcement Director has made a determination of non-objection to the Compliance Plan, the Defendant must implement and adhere to the steps, recommendations, deadlines, and timeframes outlined in the Compliance Plan.

Ill. Monetary Provisions

13. Defendant must pay a civil money penalty of $13,000 to the Bureau.

14, Within 10 days of the Effective Date, Defendant must pay $6,500 of the civil money penalty by wire transfer to the Bureau or to the Bureau’s agent in compliance with the Bureau’s wiring instructions.

15. Within 40 days of the Effective Date, Defendant must pay the remaining $6,500 of the civil money penalty by wire transfer to the Bureau or to the Bureau’s agent in compliance with the Bureau’s wiring instructions.

16. The civil money penalty paid under this Order will be deposited in the Civil Penalty Fund of the Bureau as required by section 1017(d) of the CFPA, 12 U.S.C. § 5497(d).

17. Defendant must treat the civil money penalty paid under this Order as a penalty paid to the government for all purposes. Regardless of how the Bureau ultimately uses those funds, Defendant

may not:

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a. Claim, assert, or apply for a tax deduction, tax credit, or any other tax benefit for any civil money penalty paid under this Order; or

b. Seek or accept, directly or indirectly, reimbursement or indemnification from any source, including but not limited to payment made under any insurance policy, with regard to any civil money penalty paid under this Order,

18. To preserve the deterrent effect of the civil money penalty in any Related Consumer Action, Defendant may not argue that Defendant is entitled to, nor may Defendant benefit by, any offset or reduction of any compensatory monetary remedies imposed in any Related Consumer Action because of the civil money penalty paid in this action (Penalty Offset). If a court in any Related Consumer Action grants such a Penalty Offset, Defendant must, within 30 days after entry of a final order granting the Penalty Offset, notify the Bureau, and pay the amount of the Penalty Offset to the U.S. Treasury. Such a payment will not be considered an additional civil money penalty and will not change the amount of the civil money penalty imposed in this action.

IV. Additional Monetary Provisions

19: In the event of any default on Defendant’s obligations to make payment under this Order, interest, computed under 28 U.S.C. § 1961, as amended, will accrue on any outstanding amounts not paid from the date of default to the date of payment, and will immediately become due and payable.

20. Defendant must relinquish all dominion, control, and title to the funds paid to the fullest extent permitted by law and no part of the funds may be returned to Defendant.

21. Under 31 U.S.C. § 7701, Defendant, unless it already has done so, must furnish to the Bureau its taxpayer identifying numbers, which may be used for purposes of collecting and reporting on

any delinquent amount arising out of this Order.

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22. Within 30 days of the entry of a final judgment, Order, or settlement in a Related Consumer Action, Defendant must notify the Enforcement Director of the final judgment, Order, or settlement in writing.

Vi Reporting Requirements

23. For 5 years from the Effective Date, the Defendant must notify the Bureau of any development that is likely to affect compliance obligations arising under this Order, including but not limited to, a dissolution, assignment, sale, merger, or other action that would result in the emergence of a successor company; the creation or dissolution of a subsidiary, parent, or affiliate that engages in any acts or practices subject to this Order; the filing of any bankruptcy or insolvency proceeding by or against Defendant; or a change in Defendant’s name or address. Defendant must provide this notice at least 30 days before the development or as soon as practicable after learning about the development, whichever is sooner.

24. Within 7 days of the Effective Date, Defendant must designate at least one telephone number and email, physical, and postal address as points of contact, which the Bureau may use to communicate with Defendant.

25: Defendant must report any change in the information required to be submitted under this Section at least 30 days before the change or as soon as practicable after the learning about the change, whichever is sooner.

26. Within 90 days of the Effective Date, Defendant must submit to the Enforcement

Director an accurate written compliance progress report (Compliance Report), which, at a minimum:

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a. Describes in detail the manner and form in which Defendant has complied with this Order; and b. Attaches a copy of each Order Acknowledgment obtained under Section VI unless previously submitted to the Bureau.

VI. Order Distribution and Acknowledgment 27. Within 30 days of the Effective Date, Defendant must deliver a copy of this Order to each of its executive officers, as well as to any managers, employees, service providers, or other agents and representatives who have responsibilities related to Defendant’s mortgage credit product advertisements. 28. For 5 years from the Effective Date, Defendant must deliver a copy of this Order to any business entity resulting from any change in structure referred to in Section V, any future board members and executive officers, as well as to any managers, employees, service providers, or other agents and representatives who will have responsibilities related to Defendant’s mortgage credit product advertisements, before they assume their responsibilities. 29. Defendant must secure a signed and dated statement acknowledging receipt of a copy of this Order, ensuring that any electronic signatures comply with the requirements of the E-Sign Act, 15 U.S.C. § 7001 et seq., within 30 days of delivery, from all persons receiving a copy of this Order under this Section.

VII. Recordkeeping 30. Defendant must create, for at least 5 years from the Effective Date, the following business records:

a. All documents and records necessary to demonstrate full compliance with each

provision of this Order, including all submissions to the Bureau.

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b. Copies of all advertisements including any such materials used by a third party on behalf of Defendant.

g Records showing, for each service provider providing services related to direct mail marketing, the name of a point of contact, and that person’s telephone number; email, physical, and postal address; job title or position; dates of service; and, if applicable, the reason for termination.

31. Defendant must retain the documents identified in Paragraph 30 for at least 5 years.

32. | Defendant must make the documents identified in Paragraph 30 available to the Bureau upon the Bureau’s request.

VIII. Notices

33. Unless otherwise directed in writing by the Bureau, Defendant must provide all submissions, requests, communications, or other documents relating to this Order in writing, with the subject line, “In re All Financial Services, LLC, Case No. 15-cv-420,” and send them either:

a. By overnight courier (not the U.S. Postal Service), as follows:

Assistant Director for Enforcement Consumer Financial Protection Bureau ATTENTION: Office of Enforcement 1625 Eye Street, N.W.

Washington D.C. 20006; or

b. By first-class mail to the below address and contemporaneously by email to [email protected]:

Assistant Director for Enforcement Consumer Financial Protection Bureau ATTENTION: Office of Enforcement 1700 G Street, N.W.

Washington D.C. 20552

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IX. Cooperation with the Bureau

34. For 5 years from the Effective Date, the Defendant must respond in full to any future information request from the Bureau related to matters described in this Order. X. Compliance Monitoring

35. Within 14 days of receipt of a written request from the Bureau, Defendant must submit additional compliance reports or other requested information regarding Defendant’s mortgage credit product advertisements, which must be signed under penalty of perjury; provide sworn testimony; or produce documents,

36. Defendant must permit Bureau representatives to interview any employee or other person affiliated with Defendant and involved in Defendant’s mortgage credit product advertisements who has

agreed to such an interview. The person interviewed may have counsel present.

37. Nothing in this Order will limit the Bureau’s lawful use of compulsory process, under 12 C.F.R. § 1080.6.

XI. _—_—- Release

38. The Bureau releases and discharges Defendant from all potential liability for law

violations that the Bureau has or might have asserted based on the practices described in the Complaint, to the extent such practices occurred before the Effective Date and the Bureau knows about them as of the Effective Date. The Bureau may use the practices described in this Order in future enforcement actions against Defendant and its affiliates, including, without limitation, to establish a pattern or practice of violations or the continuation of a pattern or practice of violations, or to calculate the amount of any penalty. This release does not preclude or affect any right of the Bureau to determine and ensure

compliance with the Order, or to seek penalties for any violations of the Order.

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XII. Retention of Jurisdiction

39. The Court will retain jurisdiction of this matter for purposes of construction, modification, and enforcement of this Order. IT IS SO ORDERED,

3 ( ST DATED this A! day of October, 2015.

fm fpr

Magistrate Judge Beth P. Gesner

Complaint (Feb. 2015)

PDF of this document (30 pages)

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND BALTIMORE DIVISION CONSUMER FINANCIAL PROTECTION BUREAU 1700 G Street NW Washington, DC 20552 Plaintiff, v.

ALL FINANCIAL SERVICES, LLC 20 Pleasant Ridge Drive, Suite F Owings Mills, MD 21117 Baltimore County Defendant.

Case No.

COMPLAINT Plaintiff, the Consumer Financial Protection Bureau (“Bureau”), alleges as follows: INTRODUCTION 1.

The Consumer Financial Protection Bureau brings this action against All Financial Services, LLC (“All Financial Services,” or “Company”) alleging that All Financial Services disseminated deceptive and misleading advertisements for mortgage credit products in violation of the Mortgage Acts and Practices Rule (“Regulation N” or “MAP Rule”), 12 C.F.R. pt. 1014, and sections 1031(a) and 1036(a)(1)(B) of the Consumer Financial Protection Act of 2010 (“CFPA”), 12 U.S.C. §§ 5531(a), 5536(a)(1)(B). Additionally, on information and belief, the Company has failed to maintain copies of disseminated advertisements as required by Regulation N. 12 C.F.R. § 1014.5. Case 1:15-cv-00420-JFM Document 1 Filed 02/12/15 Page 1 of 30

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The CFPA 2.

Sections 1031(a) and 1036(a)(1)(B) of the CFPA prohibits covered persons from engaging in “deceptive” acts or practices. 12 U.S.C. §§ 5531(a), 5536(a)(1)(B). 3.

An act or practice is deceptive under the CFPA if (1) there is a misrepresentation or omission of information that is likely to mislead consumers acting reasonably under the circumstances, and (2) that information is material to consumers.

Regulation N 4.

Regulation N prohibits any person from making “any material misrepresentations, expressly or by implication, in any commercial communication, regarding any term of any mortgage credit product.” 12 C.F.R. § 1014.3.

Regulation N defines a “commercial communication” as “any written or oral statement, illustration, or depiction ... that is designed to effect a sale or create interest in purchasing goods or services” including mailers. 12 C.F.R. § 1014.2.

Regulation N defines “term” as “any of the fees, costs, obligations, or characteristics of or associated with the product. It also includes any of the conditions on or related to the availability of the product.” 12 C.F.R. § 1014.2.

Regulation N defines “mortgage credit products” as “any form of credit that is secured by real property or a dwelling and that is offered or extended to a consumer primarily for personal, family, or household purposes.” 12 C.F.R. § 1014.2. 8.

Regulation N specifies a non-exclusive list of prohibited misrepresentations, including misrepresentations about whether:

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the provider of the mortgage credit product is, or is affiliated with, any governmental entity, 12 C.F.R. § 1014.3(n)(1);

b. the product “is or relates to a government benefit, or is endorsed, sponsored by, or affiliated with any government or other program,” 12 C.F.R. § 1014.3(n)(2); or c.

the product includes minimum or required payments, “including but not limited to misrepresentations about any payments or that no payments are required in a reverse mortgage,” 12 C.F.R. § 1014.3(k).

Regulation N also requires persons subject to the MAP Rule to retain records related to commercial communications regarding any term of any mortgage credit product for twenty-four months after the last date that the communication was disseminated. 12 C.F.R. § 1014.5. 10.

The records required to be retained under the MAP Rule include “[c]opies of all materially different commercial communications … regarding any term of any mortgage credit product, that the person made or disseminated during the relevant time period.” 12 C.F.R. § 1014.5(a)(1). JURISDICTION AND VENUE 11.

This Court has subject-matter jurisdiction over this action because the action is “brought under Federal consumer financial law,” 12 U.S.C. § 5565(a)(1), presents a federal question, 28 U.S.C. § 1331, and is brought by an agency of the United States, 28 U.S.C. § 1345. 12.

Venue is proper in this district because a substantial part of the events or omissions giving rise to the Bureau’s claims occurred within this district and All Financial Services maintains offices and does business in this district. 28 U.S.C. § 1391(b); 12 U.S.C. § 5564(f). Case 1:15-cv-00420-JFM Document 1 Filed 02/12/15 Page 3 of 30

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PARTIES 13.

The Bureau is an agency of the United States charged with regulating the offering and providing of consumer financial products and services under “Federal consumer financial laws,” 12 U.S.C. § 5491(a), including section 626 of the Omnibus Appropriations Act, 2009, 12 U.S.C. § 5481(12)(Q), (14), as amended by section 1097 of the CFPA, 12 U.S.C. § 5538, and its implementing regulation, Regulation N, 12 C.F.R. pt. 1014 and sections 1031 and 1036 of the Consumer Financial Protection Act of 2010 (“CFPA”), 12 U.S.C. §§ 5531, 5536. 14.

The Bureau has independent litigating authority, including the authority to enforce the CFPA and Regulation N. 12 U.S.C. § 5564(a)-(b).

15.

Defendant All Financial Services, LLC is a limited liability company formed in Maryland in 2010.

16.

The Company is licensed as a mortgage broker in the District of Columbia and Pennsylvania, as a residential mortgage broker in New Jersey, and as a mortgage lender in Maryland. 17.

The Company is, and has been during all times relevant to this Complaint, a provider of “mortgage credit product[s],” as that term is defined in Regulation N. 12 C.F.R. § 1014.2. 18.

All Financial Services is a “person” within the meaning of Regulation N because it is a corporation. 12 C.F.R. § 1014.2.

19.

All Financial Services is a “covered person” under the CFPA because it is a corporation that engages in offering and providing residential mortgage loans, which are “consumer financial products or services” under the CFPA. 12 U.S.C. §§ 5481(5), (6), (15)(A)(i), (19). Case 1:15-cv-00420-JFM Document 1 Filed 02/12/15 Page 4 of 30

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FACTS 20.

Since at least November 2011, All Financial Services disseminated advertisements for Home Equity Conversion Mortgages (“HECM”). A HECM is a reverse mortgage product offered by private lenders and insured by the Federal Housing Administration (“FHA”), which is a part of the U.S. Department of Housing and Urban Development (“HUD”).

21.

All Financial Services paid a marketing company (“Marketing Company”) to produce advertisements for its mortgage credit products. On information and belief, All Financial Services approved the advertisements and paid the Marketing Company to disseminate them. 22.

These advertisements constituted “commercial communication[s]” regarding the terms of mortgage credit products, as that term is defined in Regulation N. 12 C.F.R. § 1014.2. 23.

All Financial Services’ advertisements appeared as if they were United States government notices and, as alleged below, contained deceptive information about the HECM loan product.

24.

The Company disseminated at least four versions of HECM direct mail advertisements during the applicable time period. Each HECM direct mail version contained variations in content but used substantially the same format.

25.

Documents representing four versions of All Financial Services’ advertisement are attached as Exhibits 1 through 4. (Consumers’ names and addresses have been redacted from the attached documents.) 26.

On information and belief, All Financial Services used the advertisement version marked Exhibit 1 from a date prior to November 5, 2011 through February 17, 2012. A total of 87,656 copies of this version were disseminated from November 5, 2011 through February 17, 2012. Case 1:15-cv-00420-JFM Document 1 Filed 02/12/15 Page 5 of 30

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27.

All Financial Services has not produced a final, accurate copy of the advertisement disseminated from February 24, 2012 through August 17, 2012 despite the Bureau’s demands for such a copy.

28.

The Marketing Company produced a draft version of the advertisement disseminated from February 24, 2012 through August 17, 2012, along with an email that describes the changes made to that draft before the final version was disseminated. A copy of this draft and the email are attached as Exhibit 2. (The email address of an All Financial Services employee has been redacted in part from the attached document.) A total of 180,644 copies of the final version of the advertisement were disseminated.

29.

All Financial Services used the advertisement version marked Exhibit 3-A from August 24, 2012 through October 12, 2012. On information and belief, Exhibit 3-A represents the final version of the advertisement, including changes marked in a draft version, Exhibit 3-B. A total of 70,186 copies of the final version were disseminated.

30.

All Financial Services used the advertisement version marked Exhibit 4 from October 19, 2012 through December 28, 2012. A total of 82,431 copies of this version were disseminated. 31.

In total, 420,917 copies of advertisements in the form of Exhibits 1, 2, 3 or 4 were disseminated between November 5, 2011 and December 28, 2012. Deceptive Misrepresentations Regarding Government Affiliation 32.

The MAP Rule specifically prohibits misrepresentations regarding whether a mortgage credit product is being offered by a United States government entity or by a company with an affiliation with a government agency and whether the product offered is endorsed, sponsored by, or affiliated with any government agency or government program. 12 C.F.R. § 1014.3(n). Case 1:15-cv-00420-JFM Document 1 Filed 02/12/15 Page 6 of 30

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33.

The envelopes that All Financial Services used to disseminate its advertisements obscured the source of the advertisement and made the advertisement look like a government notice. 34.

The envelopes used beginning before November 5, 2011 and until August 18, 2012, included in Exhibits 1 and 2, display an image of an eagle clutching what appear to be arrows in the upper left hand corner. The image closely resembles the eagle incorporated into the Great Seal of the United States.

35.

On each envelope used to mail an advertisement in the form of Exhibits 1 and 2 next to the eagle, where a return address would normally be, the envelope reads “IMPORTANT DOCUMENT ENCLOSED,” followed by a citation to the U.S. Code regarding tampering with the mail, and then reading “OPEN IMMEDIATELY.”

36.

On each envelope used to mail an advertisement in the form of Exhibits 1 and 2, the envelope includes the text “Home Saver – HECM Program Eligibility Notice” (emphasis in original). 37.

Taken together, the contents and design of the envelopes included in Exhibits 1 and 2 create a misleading impression that the document inside is from a government agency. 38.

The envelope version used beginning August 24, 2012, and included in Exhibits 3 and 4, has a different design but also does not include the Company’s name and includes a reference to the U.S. Code in the area usually used for a return address.

39.

The envelope version used beginning August 24, 2012 and included in Exhibits 3 and 4 includes the text “HECM Program Eligibility Notice” (emphasis in original). 40.

The envelope version included in Exhibits 3 and 4 also creates an impression that the document inside is from a government agency.

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41.

The versions of the advertisement disseminated from before November 5, 2011 through August 24, 2012, attached as Exhibits 1 and 2, include a heading that reads “GOVERNMENT LENDING DIVISION,” with “Housing & Recovery Act of 2008 Eligibility Notice” immediately underneath.

42.

On the versions of the advertisement in the form of Exhibits 1 and 2, the name of the lender only appears with the preface: “Eligible Lender:” (emphasis in original) implying that the sender is the government and it is referring to a third party lender. 43.

On the versions of the advertisement in the form of Exhibits 1 and 2, the letter begins “The U.S. Government has approved a new mortgage stimulus package for senior homeowners 62 years of age or older as a result of the Housing & Recovery Act of 2008 [HERA].” 44.

The letter also tells recipients that “[y]our assigned program officer can show you how to take advantage of this program….”

45.

FHA-insured HECM loans have been available since the early 1990s. 46.

The versions attached as Exhibits 1 and 2 do not include any disclaimer language clarifying that the source of the advertisement is not a government agency. 47.

The versions disseminated from before November 5, 2011 until February 17, 2012, Exhibit 1, include, as the first sentence of the second paragraph of text in the advertisement, “As a HUD approved lender, we are authorized to assist seniors in gaining all the information on the new program and to help seniors apply prior to the expiration date.” On information and belief, the version of Exhibit 2 disseminated beginning February 17, 2012 did not include the phrase “As a HUD approved lender.” Case 1:15-cv-00420-JFM Document 1 Filed 02/12/15 Page 8 of 30

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48.

Taken together, the contents and design of each advertisement in the form of Exhibits 1, 2, 3, and 4 create a misleading impression that the advertisement is from a government agency or from a lender with a special affiliation or relationship with a government agency. 49.

Whether an advertisement is from a government agency, and whether a lender has a special affiliation or relationship with a government agency, is material to a consumer. Deceptive Misrepresentations Regarding Whether Payments are Required 50.

The MAP Rule specifically prohibits misrepresentations regarding whether the product includes minimum or required payments, “including but not limited to misrepresentations about any payments or that no payments are required in a reverse mortgage.” 12 C.F.R. § 1014.3(k). 51.

Each advertisement in the form of Exhibits 1, 2, 3, and 4 contains the following statement, in bold letters: “There is no monthly payment or repayment required whatsoever for as long you or your spouse live in the home.”

52.

While monthly principal and interest payments are not required pursuant to HECM loans, borrowers are required to continue to pay for hazard insurance and property taxes. 53.

A HECM loan could become due and payable if the mortgagor fails to meet the obligation to pay hazard insurance and taxes or to meet other obligations, including maintaining the property.

54.

At the time of the advertisements in the form of Exhibits 1, 2, 3, and 4, HECM loans became due and payable upon the death of the last mortgagor; if the spouse of the deceased borrower was not also a mortgagor, that spouse did not have a right to stay in the home without paying or refinancing the loan.

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55.

In sum, the statement that “[t]here is no monthly payment or repayment required whatsoever for as long you or your spouse live in the home” is false and creates the misleading impression that no monthly payments or repayments are required whatsoever and that having a borrower or a spouse living in the home is the only condition required to avoid repayment. 56.

Whether, and under what conditions, payments or repayment are required are material terms.

Deceptive Misrepresentations Regarding the Product’s Time Limits 57.

Each of the advertisements in the form of Exhibits 1, 2, 3, and 4 includes, in bold letters, the words “Notice Expiration” followed by a date.

58.

Each of the advertisements in the form of Exhibits 1, 2, 3, and 4 also states that the Company could “help seniors safely apply prior to the expiration date.” 59.

Each of the advertisements in the form of Exhibits 1, 2, and 3 also includes the text: “The U.S. Government has approved a new mortgage stimulus package for senior homeowners 62 years of age or older as a result of the Housing and Recovery Act of 2008. This program has already helped thousands of seniors save their home. To take advantage of this program, seniors must inquire before the deadline.”

60.

In fact, there is not now, and has never been, a scheduled expiration date or deadline for the FHA HECM insurance program.

61.

Whether a product is time-limited relates to the availability of the product and is a material term of the product.

62.

The advertisements’ representation that the government is offering a new and timelimited program is deceptive.

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Failure to Maintain Records 63.

The MAP Rule also contains recordkeeping requirements. Among other things, a person subject to the rule is required to maintain, for a period of twenty-four months after mortgage advertisements are disseminated, copies of all materially different advertisements it disseminates. 12 C.F.R. § 1014.5(a)(1). Failure to keep such records is a violation of the rule. 12 C.F.R. § 1014.5(b). 64.

In response to a Bureau request regarding a specific advertisement, instead of producing a copy of the advertisement, All Financial Services stated through counsel in August 2013 that it did “not believe All Financial has a copy of each mailing that went out.” 65.

In response to the Bureau request regarding a specific advertisement, the Company stated through counsel that it had supplied “copies of the documents that were similar to the referenced mailings.”

66.

On information and belief, the Company failed to maintain copies of mortgage advertising it disseminated.

CAUSES OF ACTION Count I: Violations of Regulation N, Prohibited Representations Regarding Government Affiliation 67.

The allegations in paragraphs 1 – 66 are incorporated by reference. 68.

In numerous instances, All Financial Services made material misrepresentations regarding the term of a mortgage credit product in commercial communications by misrepresenting that All Financial Services was, or was affiliated with, the United States government, in violation of 12 C.F.R. § 1014.3(n)(1).

69.

In numerous instances, All Financial Services made material misrepresentations in commercial communications regarding the term of a mortgage credit product by misrepresenting that the Case 1:15-cv-00420-JFM Document 1 Filed 02/12/15 Page 11 of 30

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advertised product was or was related to a government benefit or that it was endorsed or sponsored by a government program, in violation of 12 C.F.R. § 1014.3(n)(2). Count II: Violations of the CFPA, Deception Regarding Government Affiliation 70.

The allegations in paragraphs 1 – 66 are incorporated by reference. 71.

In numerous instances, All Financial Services misrepresented in advertisements disseminated to consumers that the Company was, or was affiliated with, the United States government, or that its mortgage products were endorsed or sponsored by a government program. 72.

The advertisements were likely to mislead consumers acting reasonably under the circumstances.

73.

Whether a particular advertisement was sent by the United States government or by a company with a special relationship with, or endorsement from, a government agency or whether a mortgage product was endorsed or sponsored by a government program would be material to consumers deciding whether to respond to a particular advertisement or obtain a loan with that company. 74.

The Company’s misrepresentations constitute deceptive acts or practices that violate sections 1031(a) and 1036(a)(1)(B) of the CFPA, 12 U.S.C. §§ 5531(a), 5536(a)(1)(B). Count III: Violations of Regulation N, Prohibited Representation Regarding Required Payments and Repayment 75.

The allegations in paragraphs 1 – 66 are incorporated by reference. 76.

In numerous instances, All Financial Services made material misrepresentations regarding whether the advertised reverse mortgage loan, a mortgage credit product, includes minimum or required payments, a term of the product, in violation of 12 C.F.R. § 1014.3(k). Case 1:15-cv-00420-JFM Document 1 Filed 02/12/15 Page 12 of 30

Page 24

Count IV: Violations of the CFPA, Deception Regarding Required Payments and Repayment 77.

The allegations in paragraphs 1 – 66 are incorporated by reference. 78.

In numerous instances, All Financial Services misrepresented in advertisements disseminated to consumers that no monthly payment or repayment was required “whatsoever.” 79.

The advertisements were likely to mislead consumers acting reasonably under the circumstances.

80.

Whether and under what circumstance payments or repayment is required would be material to a reasonable consumer deciding whether to respond to a particular advertisement or obtain a loan with that company.

81.

The Company’s misrepresentations constitute deceptive acts or practices that violate sections 1031(a) and 1036(a)(1)(B) of the CFPA, 12 U.S.C. §§ 5531(a), 5536(a)(1)(B). Count V: Violations of Regulation N, Prohibited Representation Regarding an Expiration Date or Time Limit 82.

The allegations in paragraphs 1 – 66 are incorporated by reference. 83.

In numerous instances, All Financial Services made material misrepresentations regarding a term of a mortgage credit product in commercial communications by stating directly or indirectly, expressly or by implication, that the FHA HECM program had an impending expiration date or deadline for application and that consumers needed to respond before the government program expired in violation of 12 C.F.R. § 1014.3.

Count VI: Violations of the CFPA, Deception Regarding an Expiration Date or Time Limit 84.

The allegations in paragraph 1 – 66 are incorporated by reference. Case 1:15-cv-00420-JFM Document 1 Filed 02/12/15 Page 13 of 30

Page 25

85.

In numerous instances, All Financial Services misrepresented in advertisements disseminated to consumers that the FHA HECM program had an impending expiration date or deadline for application and that consumers needed to respond before the government program expired. 86.

The advertisements were likely to mislead consumers acting reasonably under the circumstances.

87.

Whether a loan program is time-limited would be material to consumers deciding whether and when to respond to a particular advertisement and when to obtain a loan. 88.

The allegations in paragraphs 1 – 66 are incorporated by reference. 90.

All Financial Services failed to maintain copies of all materially different advertisements it disseminated for a period of twenty-four months in violation of 12 C.F.R. § 1014.5(b). DEMAND FOR RELIEF Plaintiff requests that the Court, as permitted by 12 U.S.C. § 5565: a.

permanently enjoin Defendant from committing future violations of Regulation N or the prohibition against unfair, deceptive, or abusive acts or practices under the CFPA; b. order disgorgement of ill-gotten revenues by Defendant; c.

impose civil money penalties on Defendant under the CFPA; d. order Defendants to pay the Bureau’s costs in connection with prosecuting this action; and e.

award additional relief as the Court may determine to be just and proper. Case 1:15-cv-00420-JFM Document 1 Filed 02/12/15 Page 14 of 30

Page 26

Respectfully submitted, Anthony Alexis Enforcement Director Ori Lev Deputy Enforcement Director Frank Kulbaski Assistant Deputy Enforcement Director /s/ Abigail Pound, Bar. No. 802948 Zach Mason, Bar. No. 802946 Enforcement Attorneys Consumer Financial Protection Bureau 1700 G Street, NW Washington, DC 20552 (202) 435-7547 – Telephone (202) 435-7329 – Fax [email protected] For the Consumer Financial Protection Bureau Case 1:15-cv-00420-JFM Document 1 Filed 02/12/15 Page 15 of 30

Page 27

EXHIBIT 1 Case 1:15-cv-00420-JFM Document 1 Filed 02/12/15 Page 16 of 30

Page 28

TVILNACIANOD stc00n' lH

Case 1:15-cv-00420-JFM Document1 Filed 02/12/15 Page 17 of 30

GOVERNMENT LENDING DIVISION Hausing & Recovery Act of 2008 Eligibility Notice

Efigible Lender: All Financial Services 20 Pleasant Ridge Drive - Suite F Owings Mills, MD 21147

Notice Expiratlon: September 12, 2011

Date: August 12, 2041 Telephone; 1-388-444-1850

Mian jor Ta Pt

Mera PA et 1-3526 UT Te ota UT aa EY ER

Eligibility ID 0842HC2773

The U.S. Gavemment bas approved a new mortgage stimulus package for senior homeowners 62 years of age or older as a result of he Housing & Recovery Act of 2008. This program has already helped thousands of seniors save their home. To take advantage of this program, seniors must inquire before the deadiine.

As a HU!) approved lender, we are authorized to assist seniars in gaining all the information on the new program and to help seniors safely apply prior to the expiration dafe. A 24 hour helpline has been established to take your calls.

Based ari our records, you are eligibile for a reverse morigage where the funds can be used to get rid of your current mortgage payment, faken as a lump sum or used as aa line of credit. There is no monthly payment or repayment required whatsoever for as long as you or your spouse live in the home,

Your assigned program officer can show you how to take advantage of this program to use th money any way you wish Including:

Get all of your cash in one lump sum

« Have your money distributed to you on a monthly basis

* Keep your money in a line of credit that you can access at any time (unused portion grows over time)

¢ Any combination of these payment metheds

24 Hour Senior Helpline 1-888-444-1850

Call And Ask For:

2) Mr. Jerry Washington

Bice

fy co 5 oo Ao

pale fry

GOVERNMENT LENDING DIVISION Housing & Recovery Act of 2008 Eligibility Notice

Eligible Lender: All Financiat Services 20 Pleasant Ridge Drive - Suite F Owings Mills, MD 24117

Notice Expiration: September 12, 2044

Date: August 12, 2011 Telephone: 1-888-444-1850

Eligibltity ID 0812HC2813

The U.S. Government has appraved a new morigage stlmulus package for senior homeow 62 years of age of older as 4 result of the Housing & Recovery Act of

As a HUD approved lender, we are authorized to assist seniors in gaining all the information on the new program and to help seniors safely apply prior te the expiration date. A 24 hour helpline has been established to take your calls,

Based an our records, you are eligibile far a reverse mortgage where the funds can be used to get rid of your current morgage payment, taken as a lump sum or used as a line of credit. There is no monthly payment or repayment required whatsoever for as long as you or your spause live in the home.

Your assigned program officer can show you how to take advantage of this program fo use the money any way you Wish including:

* Get all of your cash in one lump sum

* Have your money distributed to you on a monthly basis

« Keep your money in a line of credit that you can access at any time (unused portion grows over time)

* Any combination of these payment methods

24 Hour Senior Helpline 1-888-444-1850

Call And Ask For:

@ Mr. Jerry Washington

f a

Page 29

Case 1:15-cv-00420-JFM Document1 Filed 02/12/15 Page 18 of 30

:f IMPORTANT DOCUMENT ENCLOSED

CONFIDENTIAL: Document for addressee only. Five years imprisonment or a fine or both for any person tampering with or obstructing the delivery of this document. U.S. CODE TITLE 18, SEC 1702

OPEN IMMEDIATELY

Presorted First Class U.S. Postage PAID Permit No, 3601 San Diego, CA

dome Saver - HECM Program Eligibility Notice

FLU00017 CONFIDENTIAL

Page 30

EXHIBIT 2 Case 1:15-cv-00420-JFM Document 1 Filed 02/12/15 Page 19 of 30

Page 31

Case 1:15-cv-00420-JFM Document1 Filed 02/12/15 Page 20 of 30

GOVERNMENT LENDING DIVISION Housing & Recovery Act of 2008 Eligibility Notice

Eligible Lender: All Financial Services 20 Pleasant Ridge Drive - Suite F Owings Mills, MD 21117

Notice Expiration: October 25, 2010

Date: October 15, 2010 Telephone: 1-888-444-1850

WASHINGTON DC 20019-2165 Eligibility ID 1015W1512

Resolve Your Mortgage Deliquency Now!!!

The U.S. Government has approved a new mortgage stimulus package for senior homeowners 62 years of age or older as a result of the Housing & Recovery Act of 2008. This program has already helped thousands of seniors save their home. To take advantage of this program, seniors must inquire before the deadline.

As a HUD approved lender, we are authorized to assist seniors in gaining all the information on the new program and to help seniors safely apply prior to the expiration date. A 24 hour helpline has been established to take your calls.

Based on our records, you are eligibile for a reverse mortgage where the funds can be used to get rid of your current mortgage payment, taken as a lump sum or used as a line of credit. There is no monthly payment or repayment required whatsoever for as long as you or your spouse live in the home.

Your assigned program officer can show you how to take advantage of this program to use the money any way you wish including:

¢ Get all of your cash in one [lump sum

¢« Have your money distributed to you on a monthly basis Keep your money in a line of credit that you can access at any time (unused portion grows over time) Any combination of these payment methods

24 Hour Senior Helpline

1-888-444-1850 Call And Ask For: 7 ay Mr. Jerry Washington ma

FLU00022 CONFIDENTIAL

Page 32

Case 1:15-cv-00420-JFM Document1 Filed 02/12/15

Page 21 of 30

From: Yelin Htwar <{@allfinsvs.com> Sent: Thursday, February 16, 2012 10:35 AM To: Jeremy Crosslin Ce: Andy Riddle Subject: 2 Minor Revisions For Letter Feb 17th 2012 Andy / Jeremy:

I. 2" Paragraph:

Change From: “As a HUD approved lender, we are...”

To: We are authorized to....

II. 3rd paragraph, can you slightly revise the following: From: “ Based on our records, you are eligible for a reverse mortgage ..... To: “Based on our records, you may be eligible for a reverse mortgage....

Thanks, Yelin

FLU00034 CONFIDENTIAL

Page 33

Case 1:15-cv-00420-JFM Document1 Filed 02/12/15 Page 22 of 30

IMPORTANT DOCUMENT ENCLOSED

CONFIDENTIAL: Document for addressee only. Five years imprisonment or a fine or both for any person tampering with or obstructing the delivery of this document. U.S. CODE TITLE 18, SEC 1702

OPEN IMMEDIATELY

Presoried First Class U.S. Postage PAID Permit No. 3604 San Diego, CA

Home Saver - HECM Program Eligibility Notice

FLU00017 CONFIDENTIAL

Page 34

EXHIBIT 3 Case 1:15-cv-00420-JFM Document 1 Filed 02/12/15 Page 23 of 30

Page 35

Case 1:15-cv-00420-JFM Document1 Filed 02/12/15 Page 24 of 30

Losk ftos OVE « SENIORS LENDING DIVISION arwl Lea bet (Cc 2012 Notification of Eligibility oF p Eligible Lender: All Financial Services ; . 20 Pleasant Ridge Drive - Suite F Date: <<mail date>> Owings Mills, MD 21117 Telephone: 1-888-444-1850 Notice Expiration: <<exp date>> «FIRST» «LAST» aWOn «SEQUENCE: TeTRAYNGs PePKGNOn «TRAYMRK> «ADDRESS» «ClTY» «ST» «ZiP» Eligibility ID «ID»

The U.S. Govemment through the Federal Housing Administration (FHA) has made Reverse Mortgages available exclusively for homeowners 62 years of age or older. This program has already helped thousands of seniors like yourself enjoy a more comfortable retirement. This program has already helped thousands of seniors save-thei-hame. To take advantage of this program, seniors must inquire before the deadline. Yacheve Lunranc teat Freedoms

We are authorized to assist seniors in gaining all the information on the Rew “this

program and to help seniors safely apply prior to the expiration date. A 24 hour in Jormahinn. helpline has been established to take your calis. Kye

Based on our records, you may be eligibile for a reverse mortgage where the funds can be used to get rid of your current mortgage payment, taken as a lump sum or used as a line of credit. There is no monthly payment or repayment required whatsoever for as long as you or your spouse five in the home.

Your assigned program officer can show you how to take advantage of this

Get all of your cash in one lump sum

Have your money distributed to you on a monthly basis Keep your money in a line of credit that you can access at any time (unused portion grows over time) Any combination of these payment methods

24 Hour Senior Saéfenmarzsn LINE

1-888-444-1850 3 POUL yoneant BBB.

—_ Call And Ask For: aa

Mr. Jerry Washington

* Not an agency of the fedzral Gavergment, This Is not a commitment fo make 3 lon7. Licensed.by tha «BO TTOMSTATEs Dept. of Banking: License # «LICENSE»

FLU00397 CONFIDENTIAL

Page 36

Case 1:15-cv-00420-JFM Document1 Filed 02/12/15 Page 25 of 30

SENIORS LENDING DIVISION 2012 Notification of Eligibility

Eligible Lender: All Financial Services 20 Pleasant Ridge Drive - Suite F Owings Mills, MD 21117

Notice Expiration: 12/22/2012

Date: 11/16/2012 Telephone: 1-888-444-1850

eg UAL eA ffo Apo APL ANG GF YL Leafy gegfegealaly a, Eligibility ID 11146HCO1 — ML

The U.S. Government through the Federal Housing Administration (FHA) has made Reverse Mortgages available exclusively for homeowners 62 years of age or older. This program has already helped “approximately 750,000 American Senior Homeowners" achieve their financial freedom since the program started in 1989. To take advantage of this program, seniors must inquire before the deadline.

We are authorized to assist seniors in gaining all the information on this program and to help seniors safely apply prior to the expiration date. A 24 hour information line has been established to take your cails.

Your assigned program officer can show you how to take advantage of this program to use the money any way you wish including:

Get all of your cash in one lump sum

¢ Have your money distributed to you on a monthly basis e Keep your money in a line of credit that you can access at any time (unused portion grows over time) Any combination of these payment methods

24 Hour Senior Information Line

1-888-444-1850 Call And Ask For: 9 ej Mr. Jerry Washington BBB oneness * Not an agency of the federal Government. This is not a commitment to make 2 loan. Licensed by the Maryland Dept. of Banking: License # 19683. NMLS # 528105. FLU00023

CONFIDENTIAL

Page 37

Case 1:15-cv-00420-JFM Document1 Filed 02/12/15 Page 26 of 30

IMPORTANT DOCUMENT ENCLOSED

CONFIDENTIAL: Document for addressee only. Five years imprisonment or a fine or bath for any person tampering with or obstructing the delivery of this document. US. CODE TITLE 18, SEC 1702

OPEN IMMEDIATELY

Presorted First Class U.S. Postage PAID Permit No. 3133 Dallas, TX

HECM Program Eligibility Notice

FLU00018 CONFIDENTIAL

Page 38

EXHIBIT 4 Case 1:15-cv-00420-JFM Document 1 Filed 02/12/15 Page 27 of 30

Page 39

Case 1:15-cv-00420-JFM Document1 Filed 02/12/15 Page 28 of 30

SENIORS LENDING DIVISION 2012 Notification of Eligibility

Eligible Lender: All Financial Services 20 Pleasant Ridge Drive - Suite F Owings Mills, MD 21117

Notice Expiration: 12/22/2012

Date: 11/16/2012 Telephone: 1-888-444-1850

AT LEE LOLA Cu COU LE LY UP Oo LP a) coo Gobo 2 Eligibility ID 1116HC01 —_ A

Your assigned program officer can show you how to take advantage of this program to use the money any way you wish including:

Get all of your cash in one lump sum

¢ Have your money distributed to you on a monthly basis Keep your money in a line of credit that you can

access at any time (unused portion grows over time) Any combination of these payment methods

24 Hour Senior Information Line 1-888-444-1850

Call And Ask For:

e Mr. Jerry Washington

FQUAL HOUSING OPPORTUNITY

* Not an agency of the federal Government, This is not a commitment to make a joan. Licensed by the Maryland Dept. of Banking: License # 19683. NMLS # 528105. FLU00461

CONFIDENTIAL

Page 40

Case 1:15-cv-00420-JFM Document1 Filed 02/12/15 Page 29 of 30

Due to living on a “FIXED INCOME” and facing rising living expenses, medical expenses, and overall household expenses, approximately 2 out of 3 American senior homeowners are living on a tight monthly, financial budget once in a while or on a regular basis.

According to a recent article from AARP, below mentioned are the top reasons why American Senior Homeowners have taken advantage of the Reverse Mortgage:

10.

Paying off your current mortgage and eliminating your monthly mortgage payments for the rest of your life and your spouse’s life (if he/she is also 62 or older).

Home repairs, minor and major. This includes roof, kitchen, bathrooms, bedrooms, floors, walls, patios, porches. Get that dream kitchen or bathroom done today.

Help improve your overall quality of life.

Help pay for unexpected emergencies, whatever they may be. Help pay for every day expenses. Food, utilities, etc..

Paying off credit card bills, medical expenses, and other financial bills that are eating away your monthly income. Keep more $$ in your pockets.

Helping to pay for your property taxes, home owner’s insurance, and condo fees.

Help replace or supplement a loss of spousal income due to him or her passing away or separation / divorce, loss of employment, etc..

Vacations. Dining out. Life can be short. Enjoy yourself.

Helping out family members. Help pay for your child’s, grandchild’s high school, or college education.

Please give us a call to find out how much you may qualify for with the Reverse Mortgage Program. We will also be happy to answer any questions you and your family members have.

Once you are more educated about the Reverse Mortgage, then you can make an educated decision, whether the Reverse Mortgage is the right decision for you.

Call our 24 Hours Senior Information Line

1-888-444-1850 and ask for Jerry Washington

FLU00462 CONFIDENTIAL

Page 41

Case 1:15-cv-00420-JFM Document1 Filed 02/12/15 Page 30 of 30

IMPORTANT DOCUMENT ENCLOSED

CONFIDENTIAL: Document for addressee only. Five years imprisonment or a fine or both for any person tampering with or obstructing the delivery of this document. US, CODE TITLE 18, SEC +702

OPEN IMMEDIATELY

Presorted First Class U.S. Postage PAID Permit No. 3133 Dallas, TX

HECM Program Eligibility Notice

FLU00018 CONFIDENTIAL