On Monday, the Federal Trade Commission ("FTC") announced that it had, in partnership with the Consumer Financial Protection Bureau ("CFPB"), sent warning letters to 20 real estate agents, home builders, and lead generators, advising them to review their advertisements to ensure compliance with the Mortgage Acts and Practices-Advertising Rule, Regulation N ("MAP-AD Rule") and the FTC Act. The CFPB also sent warning letters to approximately 12 additional mortgage brokers and lenders.
The FTC and CFPB share enforcement authority over non-bank mortgage advertisers and reviewed over 800 mortgage advertisements for compliance with the MAP-AD Rule, which prohibits material misrepresentations in communications regarding the terms of mortgage financing. The agencies were particularly concerned by advertisements that: (1) offered low “fixed” mortgage rates without disclosing significant terms; (2) suggested the advertiser’s affiliation with a government agency; and (3) “guaranteed” approval and low monthly payments without disclosing significant terms. Companies found in violation of the Rule face civil penalties.
As a result of the partnership, both the FTC and CFPB have opened non-public investigations into mortgage advertisers suspected to be in violation of federal law, with the CFPB announcing that it has launched formal investigations into six companies in particular. Marketers should expect to see more cooperation and collaboration between the agencies in the future.