OCC consent order targets VA cash-out refis at Federal Savings Bank

The Office of the Comptroller of the Currency (OCC) released its April 2026 enforcement actions on Thursday, which included a consent order against a Chicago-based bank.

The consent order against The Federal Savings Bank of Chicago is tied to alleged violations of Section 5 of the Federal Trade Commission Act, and involve deceptive acts or practices tied to cash-out refinances guaranteed by the U.S. Department of Veterans Affairs (VA). The OCC claims these violations occurred between “at least” 2022 and 2024.

The OCC uses enforcement actions to require banks and institution-affiliated parties to correct deficient practices and address violations. The order states that the bank “neither admits nor denies” the allegations.

The OCC said the conduct involved significant origination fees, higher interest rates and increased monthly payments for borrowers. The office also claims that the bank made misleading statements to customers and sent them deceptive advertisements, which stated the individual had “available funds” and instructed them to contact the bank.

The deceptive statements also allegedly involved employees telling consumers about the terms of VA cash-out refinances and creating the impression that the interest rates or monthly payments would significantly decline within a defined time period.

In reality, the cash-out refinance loans were permanent, fixed-rate mortgages with set monthly payments, and the bank could not guarantee that consumers would be able to refinance into lower rates or payments as represented or implied by employees.

Within 30 days of the order, the bank’s board of directors is required to submit a written progress report to the assistant deputy comptroller. The report is supposed to detail the corrective actions needed to achieve compliance with each article of the order, the specific steps taken to address these requirements, and the results and current status of the corrective actions.

Also within 30 days of completing its review, a restitution consultant must submit a report identifying eligible consumers affected by the misconduct. Within 60 days of receiving the report, the bank must hire the consultant and submit the plan to the assistant deputy comptroller for review and approval.

Within 90 days after the bank pays restitution, the restitution consultant must review whether the bank followed the approved methodology for distributing the payments.

The bank did not respond to HousingWire‘s request for comment at the time of publication.

Aside from the consent order at the Federal Savings Bank of Chicago, the OCC also issued prohibition orders against a former JPMorgan Chase associate banker for embezzling customer funds and a former BMO Bank associate banker for making unauthorized withdrawals from an elderly customer’s account.

The OCC also terminated enforcement actions against CNB Bank & Trust, Generations Bank and a consent order with JPMorgan Chase, according to the release.