CFPB and FTC Crack Down on Misleading Mortgage Ads
The Consumer Financial Protection Bureau and Federal Trade Commission Monday handed down more than 30 warning letters to mortgage lenders, mortgage brokers, real estate agents, home builders and others, warning them to clean up misleading advertisements targeted toward veterans and seniors. The recipients are accused of violating the 2011 Mortgage 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.
In addition, the CFPB also announced it has opened formal investigations into six companies that may have committed more serious violations of the law.
“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 two regulators identified the possible violations during a joint sweep of about 800 randomly selected mortgage-related ads across the country, including ads for mortgage loans, refinancing, and reverse mortgages. The agencies looked at public-facing ads in newspapers, on the Internet, and from mail solicitations; some came to the attention of the CFPB and the FTC from consumers who complained about them.