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.

1. Advertising…
might not be what you think!
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3. About the Speaker
Theresa Ballard
Compliance Specialist
BFO Solutions | Go2comply
5/3/2012

4. Get Slides
www.slideshare.net/go2training
5/3/2012 4

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)
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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 VULNERABLE
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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…
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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
– Individual
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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 messages
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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……
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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 House
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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.
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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
• Telemarketers
5/3/2012 13

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….
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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????
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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 omitted
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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 deceptive
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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.
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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?
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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.
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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.
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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. 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.
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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 allowed
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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 disclaimers
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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.
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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 sold
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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!
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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 penalties
5/3/2012 29

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 DOC
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31. Mortgage Acts and Practices (MAP) -
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 Applies only to dwelling secured credit
that are not required by the CFPB
TILA permits private civil actions and imposes Does not provide a private right of action or
statutory damages, but not for advertising rule statutory penalties
violations
Both rules apply to any medium, including Facebook, Broker Outpost, Twitter, and any
other online forum
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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 Act
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33. 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-
idx?c=ecfr;sid=09558a8309d73086b9217fe5af1ce0ef;rgn=div5;view=text;node=12%3A8.0.2.14.18;idno=12;cc=ecfr
• MORTGAGE ASSISTANCE RELIEF SERVICES (REGULATION O)
– http://ecfr.gpoaccess.gov/cgi/t/text/text-
idx?c=ecfr;sid=09558a8309d73086b9217fe5af1ce0ef;rgn=div5;view=text;node=12%3A8.0.2.14.14;idno=12;cc=ecfr
• 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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34. 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
5/3/2012 34

35. Get Slides
www.slideshare.net/go2training
5/3/2012 35

36. Contact Information
www.Go2Comply.com
Tel: 619-397-5191
Email: info@go2comply.com
Your Compliance Solution
BFO Solutions Incorporated
tballard@bfosolutions.com
www.bfosolutions.com
5/3/2012 36

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 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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