The CFPB announced that, in conjunction with the FTC, it is issuing warning letters to mortgage lenders and brokers concerning potentially misleading mortgage advertisements in violation of the Mortgage Acts and Practices Advertising Rule and Section 5 of the FTC Act. Both agencies have also launched formal investigations. The Mortgage Acts and Practices Advertising Rule, effective August 2011, prohibits unfair or deceptive acts or practices regarding mortgage loans, loan modifications and foreclosure rescue services; the CFPB and FTC share enforcement authority under the rule. The warning letters focus on mortgage advertisements marketed to the elderly and veterans. The warning letters and formal investigations were sparked by a review conducted by both the CFPB and FTC of hundreds of randomly selected mortgage-related ads, including mortgage loans, refinancings and reverse mortgages. According to the CFPB, the review identified several problems with the advertisements: (1) misrepresentation about government affiliation, (2) inaccurate information about interest rates, (3) misleading statements concerning the costs of reverse mortgages, and (4) misrepresentations about the amount of cash or credit available to a consumer.
Alert November 27, 2012