FTC Warns Mortgage Advertisers that Their Ads May Violate Federal Law

After reviewing hundreds of mortgage advertisements, the Federal Trade Commission staff has sent letters to 20 companies, warning them that their ads may be deceptive.

The FTC sent its warning letters to real estate agents, home builders, and lead generators, urging them to review their advertisements for compliance with the Mortgage Acts and Practices Advertising Rule and the FTC Act.  

The FTC sent the letters in coordination with the Consumer Financial Protection Bureau (CFPB), which issued warning letters to approximately a dozen other companies.  The CFPB sent its warning letters to mortgage brokers and lenders.  Both agencies have opened nonpublic law enforcement investigations of other advertisers that may have violated federal law.

The agencies reviewed approximately 800 mortgage ads from a wide variety of media that included web sites, Facebook, direct mail, and newspapers.  The agencies seek to spur compliance with the Mortgage Acts and Practices Advertising Rule, known as Regulation N since rule making authority for it transferred from the FTC to the CFPB. The rule prohibits material misrepresentations in advertising or any other commercial communication regarding consumer mortgages.  The FTC and the CFPB share enforcement authority over non-bank mortgage advertisers such as mortgage lenders, brokers, servicers, and advertising agencies.  Mortgage advertisers that violate the Rule may be required to pay civil penalties. 

The agencies’ review revealed several types of troubling claims that could be misleading to consumers.  Examples are illustrated in these “mock ads".  The agencies’ review found, for example:

• Advertisements offering a very low “fixed” mortgage rate, without discussing significant loan terms.
• Advertisements containing statements, images, symbols, and abbreviations suggesting that an advertiser is affiliated with a government agency.
• Advertisements “guaranteeing” approval and offering very low monthly payments, without discussing significant conditions on these offers.  

The FTC has advice for consumers about mortgage advertising.  For more information see the website Your Home and the publication Deceptive Mortgage Ads: What They Say; What They Leave Out. 

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC's online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics.  Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.