Federal regulators have sent warning letters to more than 30 companies, including real estate agents, homebuilders and lead generators, warning them that their mortgage advertising on websites, Facebook and in newspapers and direct mailers may be deceptive.

The Federal Trade Commission said it sent letters to 20 companies in a coordinated action with the Consumer Financial Protection Bureau (CFPB), which issued warning letters to approximately a dozen others.

The FTC said the agencies’ review of about 800 mortgage ads from a wide variety of media "revealed several types of troubling claims that could be misleading to consumers." The review found potential violations of the Mortgage Acts and Practices Advertising Rule and the FTC Act in:

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

A mock mortgage advertisement from a fictional real estate agent created by the FTC as an example of a potentially misleading ad. 

The CFPB said many of the potentially misleading practices seemed to be directed at older borrowers, and active-duty military service members, or veterans.

"Some advertisers will use your military or veteran status as a way to approach you, promising special deals or implying VA approval," the CFPB said. "Others will use the lure of a ‘no-payment’ reverse mortgage to troll for older Americans desperate to find a way to stay in their home when they can no longer afford a mortgage payment. And although mortgage rates are very low right now, an offer promising ‘historically low rates’ may still have hidden traps that turn it into a bad deal."

The Mortgage Acts and Practices Advertising Rule, which took effect in August 2011, has been known as Regulation N since rule-making authority was 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.

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