A couple of weeks ago, as we were all getting ready to celebrate Thanksgiving and eat turkey, the Consumer Financial Protection Bureau (CFPB), in partnership with the Federal Trade Commission (FTC), was issuing warning letters to approximately a dozen mortgage lenders and mortgage brokers advising them to clean up potentially misleading advertisements, particularly toward older Americans and veterans. In addition, the CFPB announced that it had initiated formal investigations of six companies that it thinks may have committed more serious violations of the law regarding advertising. The CFPB and the FTC share enforcement authority for the 2011 Mortgage Acts and Practices Advertising Rule, which prohibits misleading claims concerning government affiliation, interest rates, fees, costs, payments associated with the loan, and the amount of cash or credit available to the consumer.
These actions came about from a "joint sweep" conducted by the CFPB and the FTC of about 800 randomly selected mortgage-related ads across the country, including ads for mortgage loans, refinancing, and reverse mortgages. The sweep identified numerous problems, including potential misrepresentations about government affiliation, potentially inaccurate information about interest rates, potentially misleading statements concerning the costs of reverse mortgages and potential misrepresentations about the amount of cash or credit available to a consumer.
As we approach the holidays and into the New Year, the actions by the CFPB and FTC should be another wake-up call regarding mortgage compliance. If your company advertises, be sure to have a comprehensive written advertising policy in place and review all advertising (company and loan officer) before it goes out to the public.
— Howard Green, principal at Offit Kurman, contributed to this blog