WASHINGTON (11/20/12)--The Consumer Financial Protection Bureau (CFPB) and Federal Trade Commission (FTC) have joined to warn about 12 mortgage lenders and mortgage brokers that some of their marketing practices may be illegal.
The CFPB and FTC said consumer complaints in some cases drove them to examine more than 800 randomly selected mortgage-related ads. The ads were scrutinized for potential violations of the 2011 Mortgage Acts and Practices Advertising Rule, the CFPB release said. Ads examined included online ads, print ads and direct mail solicitations. They promoted mortgage loans, refinancings and reverse mortgages.
The CFPB mainly focused on mortgage advertisements. The FTC examined ads from realtors, builders and lead generators.
The CFPB is also investigating six companies for potentially serious violations.
"Misrepresentations in mortgage products can deprive consumers of important information while making one of the biggest financial decisions of their lives," CFPB Director Richard Cordray said. "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 agencies urged the lenders and brokers to review all their advertising for potential violations. Many of the advertisements in question are tied to products marketed to older Americans and military veterans.
According to a CFPB release, potential violations include:
- Inaccurate or dishonest interest rate information;
- Misleading information on reverse mortgage costs; and
- Misrepresentations regarding the amount of cash or credit that will be made available to reverse mortgage participants.
The CFPB also cited instances in which reverse mortgage lenders promised borrowers they would be able to stay in their homes payment-free. The CFPB noted that reverse mortgage borrowers are normally required to continue paying for taxes and insurance--and will most likely lose their homes if they don't.
The use of official-looking seals or logos that imply some kind of government connection is also a prohibited practice, the CFPB said. "Although government agencies do guarantee some loans, they are not involved in the actual lending or advertising of loans," the CFPB release added.
For more on the investigations, use the resource link.