Tuesday, November 20, 2012

Federal Agencies Investigate Misleading Mortgage Ads

Federal agencies are teaming up to investigate false mortgage advertisements across the country that are mostly targeting older Americans and veterans.

The Consumer Financial Protection Bureau and the Federal Trade Commission issued warning letters to a dozen mortgage lenders and brokers telling them to “clean up potentially misleading advertisements,” according to a CFPB release. The FTC is also investigating ads by home builders and real estate professionals.

“Misrepresentations in mortgage products can deprive consumers of important information while making one of the biggest financial decisions of their lives,” says Richard Cordray, CFPB director. “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 CFPB and FTC enforce the Mortgage Acts and Practices Advertising Rule, and these agencies are investigating companies that have released false information in mortgage-related ads that promote mortgage loans, refinancing, and reverse mortgages.

The CFPB and FTC have uncovered some of the following violations so far in their investigations:
  • Misrepresentations about government affiliation with some ads for mortgage products featuring seals or logos that look like the ads have been endorsed by government agencies.
  • Misleading information about interest rates and the terms to get those low rates.
  • Misleading statements about the costs of reverse mortgages.
Source: Consumer Financial Protection Bureau and “Feds Get Tough on Shady Mortgage Advertisers,” NBC News (Nov. 19, 2012)

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