FTC Sent Warning Letters for Mortgage Ads
Some Lenders have received a letter from federal regulators advising them that their mortgage advertisements found on websites, social media networking sites, direct mailers, and written papers like magazines and newspapers may be misleading. Federal Trade Commission(FTC) mentioned that they mailed letters to an almost 2 dozen companies in coordination with the Consumer Financial Protection Bureau (CFPB) which also sent warning letters to other companies.
From extensive sources all over the media, about 800 ads were reviewed and have revealed that could mislead consumers because of its disturbing claims. The ads reviewed have pose violations of the Mortgage Acts and Practices Advertising Rule and the FTC Act.
First, advertisements that proposed a minimal fixed mortgage amount without discussing noteworthy loan terms. Second, advertisements containing statements, photos, logos and abbreviations implying that an advertiser is associated with a government group. Lastly, advertisements promising approval and suggesting low monthly payments lacking discussion regarding conditions on the offers.
CFPB mentioned that some promoters will use your military or veteran status as a reason to approach you and offer special deals or suggesting VA approval, some will lure you to “no payment” mortgage to confuse older Americans that are frantic to find a solution to still live in their houses when they can no longer be able to afford paying the mortgage payments.
The “Mortgage Acts and Practices Advertising Rule” took effect last year of August. It prohibits misrepresentations in advertising marketing and promotions or other profitable areas regarding customer mortgages. It has been tagged as Regulation N because the authority to make rules was transferred from FTC to CFPB.
FTC and CFPB have a portion of authority over non-bank mortgage promoter such as loan lenders, real estate brokers, loan servicers, and advertising institutions. Those who violate the rule may be obligated to pay civil penalties.
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