Mortgage Companies Warned On Ads
- Kara JohnsonNovember 21, 2012 - MortgageLoan.com
Nearly three dozen mortgage lenders and other companies are being put on notice to correct potentially misleading advertisements, many of them aimed at older Americans and veterans.
The Consumer Financial Protection Bureau (CFPB) and Federal Trade Commission (FTC) issued have issued letters to a dozen mortgage lenders and brokers warning them to make changes to their advertising. Similar letters were sent to another 20 companies involved in real estate sales, home building and advertising.
Charges may be coming for some
The letters were the result of an investigation by the two agencies into potential violations of the 2011Mortgage 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.
“Misrepresentations in mortgage products can deprive consumers of important information while making one of the biggest financial decisions of their lives,” said CFPB Director Richard Cordray. “Baiting consumers with false ads to buy into mortgage products would be illegal. We will conduct a fair and rigorous investigation into these issues and will take appropriate action for any violations we find.”
The CFPB said it has also begun formal investigations into six companies that it believes may have committed more serious violations of federal law.
Official-looking logos an issue
A review by the two agencies of some 800 mortgage-related advertisements in print, online and by mail found numerous instances of what the agencies said were potential violations of federal law. In some cases, according to the two agencies, advertisements included official-looking logos or seals that gave the appearance of a government affiliation. Others may have provided inaccurate information about mortgage rates or the costs of reverse mortgages, or “guaranteed” approval for a loan without disclosing key conditions.
The letters warn recipients that their ads may be in violation of federal law and urges them to review all their advertising. Failure to correct any violations could result in civil penalties.
The FTC and CFPB share enforcement authority over non-bank mortgage advertisers such as lenders, brokers, servicers and advertising agencies. The 2011 Mortgage Acts and Practices Advertising Rule essentially duplicates a previous rule giving enforcement authority to the FTC, but now includes the CFPB as well, as required under the Dodd-Frank Act.
First published at: http://www.mortgageloan.com/mortgage-companies-warned-about-ads-9300
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