CFPB Actions – Deceptive Advertising

CFPB Actions – Deceptive Advertising

 

Question:

 

What are some takeaways from recent CFPB actions involving mortgage lenders and deceptive advertising?

 

Answer:

 

In recent months, the CFPB has taken several actions against mortgage lenders for deceptive advertising particularly related to VA loans and reverse mortgages. The consent orders highlight marketing practices that mortgage lenders must avoid. Below are ten (10) key takeaways:

  1. All marketing material must be reviewed to ensure it does not contain any false, misleading, or inaccurate information.
  2. Advertisements should clearly disclose who the advertising lender is and not give a false impression that the material is from the consumer’s current lender or a government agency.
  3. When quoting rates and APR, a mortgage lender must ensure that the rates and APR are actually available to consumers and are accurate. If a rate quoted includes discount points and/or is based on a consumer meeting certain conditions, those discount points and/or conditions must be clearly disclosed in terms a consumer will understand.
  4. Advertisements should never include terminology about eliminating debt; the loan advertised is a debt.
  5. Advertisements should not include misleading comparisons involving actual or hypothetical loan terms, particularly when a lender cannot guarantee similar results.
  6. A mortgage lender should never use the term, “fixed,” when advertising an adjustable rate mortgage.
  7. Advertisements should not include language indicating an appraisal or income documentation is not required if it is in fact required or may be required in some circumstances.
  8. Advertisements should not include language indicating a consumer can skip two payments by refinancing.
  9. Reverse mortgage advertisements should not include language giving consumers the impression that they will always be able to remain in their home or that there is no risk of losing the home.
  10. Reverse mortgage advertisements must disclose the requirement to continue to pay property taxes and insurance, particularly when highlighting that a monthly mortgage payment is not required.

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