MAP rule mystery shopping.

• Author: Pry, Carl G.
• Position: MARKETING COMPLIANCE - Mortgage Acts and Practices - Editorial

LATE LAST MONTH THE CFPB AND FTC ISSUED PRESS RELEASES announcing the CFPB had sent warning letters to approximately a dozen mortgage lenders and brokers, while the FTC had sent 20 similar letters to home builders, real estate brokers and lead generators. The letters informed of possible violations of the Mortgage Acts and Practices (MAP) Advertising Rule and the FTC Act (which deals with unfair or deceptive acts or practices). The CFPB also announced commencement of formal investigations of six lenders it believes may have violated the law.

The MAP Rule (also known as Regulation N) has been discussed in this column previously, and prohibits certain practices the regulatory agencies consider unfair or deceptive when it Comes to advertising mortgage loan products. And of course we've all heard about UDAP (whether with one 'A' or two). Criticisms of either are conversations we'd all rather avoid.

Regulators are mystery-shopping lenders

The first interesting item that jumps off the press releases is the fact the agencies randomly selected approximately 800 mortgage advertisements covering mortgage loans, refinancings, and reverse mortgages. Included were mail, newspaper and Internet ads, and a few were selected as the result of complaints to the agencies. 'Thus is it clear that advertising is being "mystery shopped." Even though this particular initiative comes from the CFPB and FTC, there is no reason to exclude the possibility (or probability) the other regulators are doing the same thing.

The agencies' criticisms focused on ads targeting servicemembers and older Americans in these four areas:

* Ads that contained official-looking seals or logos implying that they came from a government entity such as the VA or HUD.

* Promises of extremely low rates, which in reality will be effective for only a short time, after which they will adjust to be much higher. The fact that disclosures were made of...