MAPs - Staying Compliant in Mortgage Advertising


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Compliance in Marketing in the Digital Age!

Anyone subject to the rule must maintain records of specific forms of communication. This includes sales scripts, training materials, marketing materials and commercial communications regarding any term of any mortgage credit product.

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MAPs - Staying Compliant in Mortgage Advertising

  1. 1. Advertising…might not be what you think! 1
  2. 2. Thank you for joining the Webinar!• Your phone will be muted, as there are hundreds of attendees on the call. Don’t forget to turn on your computer speakers or call in to hear the audio.• You can shrink the control window by clicking on the right hand arrow.• You can type your questions in the chat window. All questions will be addressed at the end of the webinar time permitting. Connect to the audio by 1) Teleconference: Dial number provided for session – (480) 480-297-0022 2) Access Code 702-448-118 Or 2) VoIP: Ensure that your computer speakers are on (a headset is recommended)
  3. 3. About the Speaker Theresa Ballard Compliance Specialist BFO Solutions | Go2comply5/3/2012
  4. 4. Get Slides 4
  5. 5. 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)5/3/2012 5
  6. 6. Mortgage Acts and Practices (MAP)• 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 VULNERABLE5/3/2012 6
  7. 7. Mortgage Acts and Practices (MAP)• 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…5/3/2012 7
  8. 8. 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 – Individual5/3/2012 8
  9. 9. 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 messages5/3/2012 9
  10. 10. Mortgage Acts and Practices (MAP) –What’s covered • Yellow Page Ads • Letters • Training Materials • In person sales presentations • What are your referral sources saying about you? • Bus benches……5/3/2012 10
  11. 11. Mortgage Acts and Practices (MAP) –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 House5/3/2012 11
  12. 12. Mortgage Acts and Practices (MAP)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.5/3/2012 12
  13. 13. 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• Telemarketers5/3/2012 13
  14. 14. Mortgage Acts and Practices (MAP)–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….5/3/2012 14
  15. 15. 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????5/3/2012 15
  16. 16. Mortgage Acts and Practices (MAP)–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 omitted5/3/2012 16
  17. 17. Mortgage Acts and Practices (MAP) –Avoid Misrepresenting – Fees Think about this for a second… – Costs You don’t have to be quoting a rate for it – Obligations to be considered advertising! – Loan Conditions “Stuck with an adjustable rate loan? NO PROBLEM. WE CAN FIX IT! Think you have – Product availability the wrong home loan? NO PROBLEM. WE CAN FIX IT!” The above is an example that could be considered misleading or deceptive5/3/2012 17
  18. 18. Mortgage Acts and Practices (MAP) –Avoid Misrepresenting• 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.5/3/2012 18
  19. 19. Mortgage Acts and Practices (MAP) –Avoid Misrepresenting• 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?5/3/2012 19
  20. 20. Mortgage Acts and Practices (MAP) –Avoid Misrepresenting• 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.5/3/2012 20
  21. 21. Mortgage Acts and Practices (MAP) –Avoid Misrepresenting• 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.5/3/2012 21
  22. 22. Mortgage Acts and Practices (MAP) –Avoid Misrepresenting• 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.5/3/2012 22
  23. 23. Mortgage Acts and Practices (MAP) –Language• Advertisements should use only one language.• Applicants answering an advertisement should receive disclosures and other documents in the language used in the advertisement.5/3/2012 23
  24. 24. Mortgage Acts and Practices (MAP) –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 allowed5/3/2012 24
  25. 25. Mortgage Acts and Practices (MAP) –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 disclaimers5/3/2012 25
  26. 26. Mortgage Acts and Practices (MAP) –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.5/3/2012 26
  27. 27. Mortgage Acts and Practices (MAP) –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 sold5/3/2012 27
  28. 28. Mortgage Acts and Practices (MAP) –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!5/3/2012 28
  29. 29. Mortgage Acts and Practices (MAP) -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 penalties5/3/2012 29
  30. 30. Mortgage Acts and Practices (MAP) –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 DOC5/3/2012 30
  31. 31. Mortgage Acts and Practices (MAP) -TILA vs. CFPB Rule TILA CFPBApplies 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 Applies only to dwelling secured creditthat are not required by the CFPBTILA permits private civil actions and imposes Does not provide a private right of action orstatutory damages, but not for advertising rule statutory penaltiesviolations Both rules apply to any medium, including Facebook, Broker Outpost, Twitter, and any other online forum5/3/2012 31
  32. 32. 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 Act5/3/2012 3232
  33. 33. Resources• MORTGAGE ACTS AND PRACTICES—ADVERTISING (REGULATION N) – idx?c=ecfr;sid=09558a8309d73086b9217fe5af1ce0ef;rgn=div5;view=text;node=12%3A8.;idno=12;cc=ecfr• TRUTH IN LENDING (REGULATION Z) – idx?c=ecfr;sid=09558a8309d73086b9217fe5af1ce0ef;rgn=div5;view=text;node=12%3A8.;idno=12;cc=ecfr• MORTGAGE ASSISTANCE RELIEF SERVICES (REGULATION O) – idx?c=ecfr;sid=09558a8309d73086b9217fe5af1ce0ef;rgn=div5;view=text;node=12%3A8.;idno=12;cc=ecfr• TELEMARKETING SALES RULE –• CAN-SPAM Act –• TELEPHONE CONSUMER PROTECTION ACT –• Don’t forget DRE and DOC5/3/2012 33
  34. 34. Compliance You Can UnderstandFrom developing one hour informational webinars to in-depth continuingeducation courses to creating innovative programs for understanding compliance,we can help you discover the best methods and keeping your staff trained andcompliant.Go2Comply has extensive expertise in compliance training development for theMortgage and Real Estate Industry on topics such as:• S.A.F.E. Act• TILA• RESPA• Red Flags• E-Sign Act• HMDA• FHA/VA5/3/2012 34
  35. 35. Get Slides 35
  36. 36. Contact Information www.Go2Comply.comTel: 619-397-5191Email: Your Compliance Solution BFO Solutions Incorporated www.bfosolutions.com5/3/2012 36
  37. 37. 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 IncorporatedConsumer Finance Protection BureauFederal Trade CommissionCalifornia Department of Real EstateHoward A. Lax – Lipson, Neilson, Cole Seltzer & Garin, PC Bloomfield Hills, MI5/3/2012 37