The CFPB and FTC announced that they have sent warning letters to mortgage advertisers urging them to review their marketing materials to ensure that they comply with the Mortgage Acts and Practices-Advertising Rule (Regulation N) and other applicable law.  The warning letters were the subject of the press call the CFPB and FTC had promoted in the media advisory they issued last week.  (The CFPB would not permit us to participate in the call despite our publication of this blog.  We were informed that as members of a law firm that represents financial institutions, we do not qualify as “credentialed” members of media.) 

The CFPB indicated that it sent warning letters to about a dozen mortgage lenders and brokers and has begun formal investigations of six companies whose violations may be more serious.  The FTC indicated that it sent warning letters to 20 companies and has also opened investigations.   

The agencies’ actions resulted from a joint review of about 800 ads across the country for mortgage loans, refinancings and reverse mortgages that appeared in a variety of media including websites,  Facebook, direct mail and newspapers.  Some of the ads were brought to the agencies’ attention by complaining consumers.  According to the CFPB, its review focused on ads by mortgage lenders and brokers targeting older Americans or veterans while the FTC’s review focused on ads by home builders, real estate professionals and lead generators.   

Examples of the types of problems the CFPB and FTC identified in the ads included potential
(1) misrepresentations about government affiliation, (2) inaccurate or misleading promotions of low interest rates, (3) misleading statements about the costs of reverse mortgages, and
(4) misleading advertisements suggesting pre-approval to receive a certain amount of money in connection with a refinancing or reverse mortgage.