Do not take this warning lightly. For years, industry insiders and regulators have been warning practitioners about their advertising practices, whether it is for forward or reverse products.
Now, the Consumer Financial Protection Bureau, in conjunction with the Federal Trade Commission, has sent warning letters to approximately a dozen mortgage lenders and mortgage brokers advising them to clean up potentially misleading advertisements, particularly those targeted toward veterans and older Americans. The press release said there is an investigation of six companies which might have violated the law.
For those of us who have attended National Reverse Mortgage Lenders Association functions, this should not be any new news. The organization has covered improper marketing practices on a number of occasions.
And as I have discussed with Louise Thaxton, a loan originator and columnist for this publication, active military personal and veterans make up a vulnerable class of consumers because of the nature of their lifestyle.
The FTC is issuing their own warning letters to about a dozen companies and continuing with their own investigations of even more companies based on their findings.
The agencies said they looked at 800 randomly selected ads for potential violations of 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. The CFPB and the FTC share enforcement authority for the rule. Companies that the CFPB finds have violated prohibitions on misleading advertising could be subject to enforcement actions.
I started this column with the word “warning.” Be advised, this is no warning—they are coming after originators for their advertising practices, so make sure you are in compliance.