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Are You Breaking the Law? What you Can and Can't Say about Mortgage Products in Advertising

Are You Breaking the Law? What you Can and Can't Say about Mortgage Products in Advertising

Are You Breaking the Law?

Posted by: Darcy McDonald, Brightwood College
Updated: August 3, 2017 | Published: Mar 17, 2015

As a professional in real estate, whether you’re a licensee, appraiser, or even a contractor, you wear a lot of hats. Some days you’re in the business of helping people, other days you’re a negotiator, and some days, you’re a quasi-loan officer. For some in our field, you’ve probably lost count of how many estimates of closing costs you’ve gone over with your clients or how many times you’ve run a payment, let alone quoted an interest rate. I’m here to tell you that some of these hats need to be permanently put on a shelf, regardless of your profession, as they could get you in trouble.

The Law

In July 2011, the Federal Trade Commission (FTC) issued the Mortgage Acts and Practices Rule—Advertising Final Rule (aka, MAP). Its purpose is to prevent unfair or deceptive acts in the mortgage industry by prohibiting misrepresentation in ads. You’re probably asking what this has to do with you if you’re not a lender. Well, it does apply to you because it directly relates to how you advertise and communicate with the public.

MAP regulates commercial communications relating to mortgage credit products. Lenders share information daily about rates, programs, terms, and anything related to financing. Realtors, licensees, and even contractors are also giving information to their clients with relation to financing.

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The Key Terms

A commercial communication is “any written or oral statement, illustration, or depiction, whether in English or any other language, that is designed to effect a sale or create interest in purchasing goods or service….” The definition goes on to include all written communication, such as newspaper, print, signs, posters, letters, scripts, internet, cellular network, or any other medium. Promotional materials and web pages are included under this definition.

A mortgage credit product is 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. Commercial property wouldn’t apply here.

Essentially, if you discuss, verbally or in any other media, anything that has to do with an interest rate, loan term, pre-payment penalty, loan fees, or any other requirements for the loan, you could be found misrepresenting or omitting material facts that are critical to the decisions consumers make under MAP.

You can give consumers a list of what lenders will need for a loan application or information about the loan process, but if you give any financial details, you’re required to comply with MAP disclosure rules, just as mortgage lenders do.

When it comes to advertising, you’re allowed to use a disclaimer, but please avoid “fine print.” If you use a disclaimer, it must be readily apparent to the consumer, be separate from the other text in the communication, and clearly convey the qualifying language of the information. Remember, the term apparent to the consumer is definitely up for interpretation, so going overboard to cover all bases is your best bet!

An additional key piece…you must keep records of all commercial advertisements for at least 24 months from when it was initially “pushed out” for all to see.

The Sting

As with all rules, this one comes with a pretty big penalty. Both the FTC and Consumer Financial Protection Bureau (CFPB) can enforce actions and seek civil penalties to the tune of $16,000 per day per violation.

The Consensus

Now that you’re under the watchful eye of the government, just like mortgage lenders, servicers, and any party to financing, it may make sense to keep the financial talk or “print” to those lenders you trust.

For more information, check out the following resources:

https://www.federalregister.gov/articles/2011/07/22/2011-18605/mortgage-acts-and-practices-advertising

http://www.ftc.gov/sites/default/files/documents/federal_register_notices/16-c.f.r.part-321-mortgage-acts-and-practices-advertising-rule-final-rule-and-statement-basis-and-purpose/110719mortgagead-finalrule.pdf.