maps - staying compliant in mortgage advertising

Advertising… might not be what you think!

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5/3/2012

About the Speaker

Theresa Ballard

Compliance Specialist

BFO Solutions | Go2comply

5/3/2012

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5/3/2012

Mortgage Acts and Practices (MAP)

• CFPB’s Mortgage Acts and Practices – Advertising Rule

(MAP) rule,

– Written by the FTC (76 FR 43826, 7/22/2011).

– Republished as CFPB Reg N,

• 12 CFR Part 1014 (76 FR 78130, 12/16/2011)

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• Designed to stop deceptive trade practices

• Rule was effective on August 19, 2011

– Are you on compliance?

• Examiners and Auditors are doing searches for materials

used by individual Loan Originators

– Web Crawlers and Spiders

• One of the easiest issues to check and one where you are

the most VULNERABLE

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• Under FTC there was a lot of “bark no real bite” –

– Things have changed..

• CFPB has direct examination authority over non-bank

originators (includes Mortgage Brokers)

• Authority can be used to enforce MAP based on

INDIVIDUAL violations

– Brokers of Record, realize the importance here…

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Mortgage Acts and Practices (MAP) –

What’s covered

– Any “commercial communication,” regardless of whether it

is oral, written, or visual

– Examples

• Email footers

• Emails that contain advertisements

• Blogs

• Video Blogs

• Websites

– Corporate

– Individual

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Mortgage Acts and Practices (MAP) – What’s covered

• Social Media (Corporate and Individual)

– Facebook

– Twitter

– Tumblr

– Linked In

– My Space

– You Tube

• Brochures (to include Open House flyers)

• Church Bulletins

• Cell phone messages

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What’s covered

• Yellow Page Ads

• Letters

• Training Materials

• In person sales presentations

• What are your referral sources saying about you?

• Bus benches……

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What’s covered

• Communications regarding terms that involve any

credit secured by a real estate dwelling for

personal, family or household purposes.

• 1-4 Family residential home to include

– Condo/Townhouse

– Co-Op

– Mobile Home

– Manufactured House

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What’s NOT covered

• Purely informational publications that do not

also solicit or otherwise communicate the

availability of credit are not covered

• Rule does not apply to businesses not

regulated by the CFPB.

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Mortgage Acts and Practices (MAP)–

Who must comply

• Mortgage Brokers and Mortgage Lenders

– Includes individual Mortgage Loan Originators

• Real Estate Brokers and Agents

• Home Builders

• Mortgage Servicers

• Telemarketers

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What’s Prohibited?

• Any material misrepresentation, expressly or by

implication, in any commercial communication, regarding

any term of any mortgage credit product.

– Who determines what will be “material” to a consumer?

CFPB!!!

• Regulator will considered – how a “reasonable person” in the

audience would view the advertisement terms

– Don’t get excited, it’s not what you think….

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Mortgage Acts and Practices (MAP) -

What’s Reasonable?

• “Reasonableness is evaluated based on the sophistication and

understanding of consumers in the group to which the representation is

targeted, which may be a general audience or a specific group, such as

children or the elderly.”

– “A claim may be susceptible to more than one reasonable

interpretation, and if one such interpretation is misleading, then the

advertisement is deceptive, even if other, non-deceptive

interpretations are possible.”

Say What????

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Specific Prohibitions

• Outlaws misrepresentations concerning

many specific loan transaction terms.

– Consider each item:

• Independently and

• From the viewpoint of the uneducated consumer

– Clarity is very important

• Statements cannot be vague or have crucial

information omitted

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Avoid Misrepresenting

– Fees

– Costs

– Obligations

– Loan Conditions

– Product availability

Think about this for a second… You don’t have to be quoting a rate for it

to be considered advertising!

“Stuck with an adjustable rate loan? NO PROBLEM. WE CAN FIX IT! Think you have the wrong home loan? NO PROBLEM. WE

CAN FIX IT!”

The above is an example that could be considered misleading or deceptive

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• The amount of cash the consumer will receive or the out-of-

pocket payment will be required at closing.

• The existence, number, amount, or timing of any minimum

or required payments.

• Whether the loan is a reverse mortgage or non-recourse

loan, and any amount that must be paid to retain the home

when the borrower moves or dies.

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• Specific info on Taxes and Insurance –

– Amounts, payments, or other requirements relating to taxes or

insurance (including tax advice).

– Escrow/Impound requirements or waivers, including the amount

needed to fund the escrow account, cushions, monthly escrow

payments.

– Any taxes or insurance premiums that must be paid at or before

closing.

– Types of insurance that must be obtained.

Are you seeing a slippery slope here?

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• Basic Loan Terms: Debt Consolidation

– The effectiveness of the mortgage credit product in helping the consumer

resolve difficulties in paying debts is covered by the rule.

– Misrepresentations that any loan can reduce, eliminate, or restructure debt.

– Misrepresentation that the loan may result in a waiver or forgiveness, in

whole or in part, of the consumer’s existing obligation.

– Misrepresentations concerning debts or costs that are incorporated into the

loan amount.

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• Any false association such as:

– The lender or broker is associated with the

borrower’s current lender, or the message is

from the current lender.

– Any association (expressed or implied) with the

government or a government agency, entity or

organization.

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• Whether there is any government benefit − Tax Benefits – this one could catch you

• That the loan is

− endorsed,

− sponsored by, or

− affiliated with any government or other program,

• Including but not limited using formats, symbols, or logos that

resemble the entity or organization.

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Language

• Advertisements should use only one

language.

• Applicants answering an advertisement

should receive disclosures and other

documents in the language used in the

advertisement.

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Waivers not permitted

• “Just kidding” won’t work..

– Cannot tell a consumer that the advertisement or

communication was not serious, or

– That the consumer should waive any misunderstanding

over advertised terms and conditions is not allowed

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Disclaimers

• May be used to avoid allegations of misrepresentation

– Any disclaimer must be “clear and conspicuous” and

– In close proximity to applicable statement

• Fine print at the bottom of a page is not a valid disclaimer.

• Accurate information in the text of an advertisement does not provide a

remedy to a misleading headline

• Talk to an attorney regarding proper disclaimers

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Record Keeping

• Keep a sample of all “materially different” communications and

supporting materials for a minimum of two (2) years after the last use

– Don’t forget State record keeping requirements whichever is longer prevails

• California DRE 3 years from the date of the closing or from the date of the listing if not consummated

• California DOC 36 months after the date of final entry on the business records of the loan

– Copies of all email footers and emails that contain advertisements

• Corporate and individual

• Need to archive

– Copies of websites

• Each version of the website

Examiners can and will use Website Crawlers or Spiders to do searches for

possible advertisement violations.

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Record Keeping

– Social Media

• Tweets (Corporate and Individual)

• Facebook posting (Corporate and Individual)

– Copies of all print advertisements, flyers, mass media, television, or

any other source

– Sales scripts and MLO training materials

– Rate sheets showing available loan terms

– Term Sheets for MI and other products sold

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Record Keeping

• Brokers of Record

– Do you know what the Loan Originators are saying and how it is being said?

• “Small Entity Rules” do not apply. All must keep records

– What is the best way to mitigate risk?

Established Policy and Procedures!

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Enforcement

• Enforcement is the responsibility of federal and state

licensing regulators.

– The CFPB and State licensing examiners will enforce the rule.

• Any attorney general or other officer of the state so

authorized, may also enforce

• Failure to keep records could constitute an independent

violation of the MAP Rule.

• Penalty? - the ability to seek civil penalties

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But wait…

• Let’s not forget about….

– CFPB Reg O – prohibits misleading statements

• Mortgage Assistance Relief Services or MARS

– Reg Z Truth In Lending Advertising

– State advertising requirements

• DRE or DOC

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TILA vs. CFPB Rule

TILA CFPB

Applies only to Creditors & Mortgage Brokers Applies to all persons advertising credit terms to include: Individual Loan Originators, Builders, Real Estate Sales Agents & Brokers ,

Requires loan term disclosures in advertisements that are not required by the CFPB

Applies only to dwelling secured credit

TILA permits private civil actions and imposes statutory damages, but not for advertising rule violations

Does not provide a private right of action or statutory penalties

Both rules apply to any medium, including Facebook, Broker Outpost, Twitter, and any other online forum

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Let’s not forget…

• Do Not Call, Do Not Fax, and Do Not Email

– State and Federal Rules

• Telemarketing Sale Rule and the National Do Not Call

Registry

• Telephone Consumer Protection Act (TCPA)

• Junk Fax Prevention Act

• CAN-SPAM Act

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Resources

• MORTGAGE ACTS AND PRACTICES—ADVERTISING (REGULATION N) – http://ecfr.gpoaccess.gov/cgi/t/text/text-

idx?c=ecfr;sid=09558a8309d73086b9217fe5af1ce0ef;rgn=div5;view=text;node=12%3A8.0.2.14.13;idno=12;cc=ecfr

• TRUTH IN LENDING (REGULATION Z) – http://ecfr.gpoaccess.gov/cgi/t/text/text-


• MORTGAGE ASSISTANCE RELIEF SERVICES (REGULATION O) – http://ecfr.gpoaccess.gov/cgi/t/text/text-


• TELEMARKETING SALES RULE – http://business.ftc.gov/documents/bus27-complying-telemarketing-sales-rule

• CAN-SPAM Act – http://business.ftc.gov/documents/bus61-can-spam-act-compliance-guide-business

• TELEPHONE CONSUMER PROTECTION ACT – http://www.fcc.gov/guides/fax-advertising

• Don’t forget DRE and DOC

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http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr;sid=09558a8309d73086b9217fe5af1ce0ef;rgn=div5;view=text;node=12:8.0.2.14.13;idno=12;cc=ecfr













http://business.ftc.gov/documents/bus27-complying-telemarketing-sales-rule









http://business.ftc.gov/documents/bus61-can-spam-act-compliance-guide-business













http://www.fcc.gov/guides/fax-advertising



5/3/2012

Compliance You Can Understand

From developing one hour informational webinars to in-depth continuing education courses to creating innovative programs for understanding compliance, we can help you discover the best methods and keeping your staff trained and compliant.

Go2Comply has extensive expertise in compliance training development for the Mortgage and Real Estate Industry on topics such as:

• S.A.F.E. Act

• TILA

• RESPA

• Red Flags

• E-Sign Act

• HMDA

• FHA/VA

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5/3/2012

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5/3/2012

Contact Information

www.Go2Comply.com

Tel: 619-397-5191

Email: [email protected]

Your Compliance Solution

BFO Solutions Incorporated

[email protected]

www.bfosolutions.com

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mailto:[email protected]


http://www.bfosolutions.com/


5/3/2012

Disclaimer

Go2Comply, it’s instructors and/or panelists are not providing legal advice. Clients should contact counsel for

legal advice. Go2Comply, ALL RIGHTS RESERVED. Published Go2Comply. Duplication or transmission is not permitted. United States of America and foreign copyright laws protect this publication. The content of this publication, or any part thereof, may not be reproduced in any manner whatsoever without written permission from the copyright holders. Permission is granted to print the material for personal use only.

Sources used in this Presentation:

BFO Solutions Incorporated

Consumer Finance Protection Bureau

Federal Trade Commission

California Department of Real Estate

Howard A. Lax – Lipson, Neilson, Cole Seltzer & Garin, PC Bloomfield Hills, MI

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maps - staying compliant in mortgage advertising

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