When it comes to mortgage marketing, companies today are highly concerned with compliance. And rightly so. Violating compliance rules within a marketing campaign — whether inadvertently or otherwise — could land your mortgage company in hot water. Federal regulators probably won’t accept “I didn’t know” as a valid excuse.
Fortunately, there’s a lot of information online about mortgage marketing regulations, compliance standards, and what you can do to protect yourself from fines and other penalties. There are mortgage marketing compliance checklists for 2016 available online as well, and other materials you could use to create your own checklist. This article compiles information from several of these sources.
Mortgage Marketing Compliance Checklist Items
The Consumer Financial Protection Bureau (CFPB) included a module on advertising and marketing within its examination procedures for mortgage loan origination. This document can be found online, in PDF format, with a quick Google search. We’ve included a copy of the PDF document here, for your convenience.
While they’re not exactly a mortgage marketing compliance checklist, the CFPB examination procedures do contain information on current advertising and marketing rules for 2016. So it’s well worth a look, if this is an area of concern for you.
Here are some highlights from the aforementioned CFPB document, TILA Regulation Z, and other sources:
Let’s start with the basics. When mortgage loan originators advertise a loan product, they should include their NMLS numbers. CFPB employees are trained to ensure that NMLS numbers have been disclosed in advertisements for loan products. This is applies to both electronic (web / email) and print ads.
Suggesting or hinting at government endorsement
This is another prohibited act that should be included in a mortgage marketing compliance checklist. You should never mislead consumers to believe that you are somehow affiliated with, or endorsed by, the government. This is a common violation (we’ve all seen those mortgage websites with American flags, government seals, and misleading claims of being a “government lender”). Rest assured, federal regulators are not shy about enforcing this rule. These and other blatant misrepresentations have no place in your mortgage marketing program.
False claims of “no fees” being charged
If you have an advertisement that claims no fees are charged on the loan, but you later charge fees, you’ll probably be in violation of federal rules. This one’s a mortgage marketing compliance no-brainer.
Using the word “fixed” in a misleading manner
CFPB trains its people to look for “misrepresentations using the word ‘fixed’.” Like most mortgage marketing compliance standards, this one is built around common sense. For instance, if you’re advertising an adjustable-rate loan product that starts off with a fixed rate for three years, you can’t really call it a “fixed-rate loan.” It’s an ARM with an introductory fixed rate. Be truthful and accurate in your mortgage marketing to ensure compliance.
Suggesting fiduciary duty to the borrower
CFPB employees are also trained to look for instances where a mortgage originator’s advertisements and promotional materials “contain misleading representations that a lender or broker is acting in a fiduciary capacity or in the consumer’s best interest, if in fact, the lender or broker has no fiduciary duty.”
Complying with the SAFE Act
In order to comply with the SAFE Act, and other regulations that deal with mortgage advertisements, compliance experts recommend that you include (at a minimum) the following components on all advertisements:
- The full legal name of the mortgage company
- The NMLS ID of the company
- Full, physical business address
- The business phone number
- The name of the originator as it appears on the NMLS website
- The NMLS ID of the originator
- The equal housing opportunity logo
CFPB Targets Misleading Advertisements
A few years ago, the CFPB went after several mortgage companies for what it felt were misleading advertisements. Many of the alleged offenders were targeting older Americans (with reverse mortgages) and veterans (with VA loans). In a related press release, CFPB listed the most common problems. This is good information to include in your 2016 mortgage marketing compliance checklist.
The CFPB sweep uncovered the following problems:
- Potential misrepresentations about government affiliation: The agency stated that some advertisements for mortgage products contained official-looking seals or logos, or other characteristics that could confuse consumers about a possible government affiliation. This kind of tactic goes against mortgage marketing compliance, as well as basic ethics.
- Potentially inaccurate information about interest rates: In its investigation, CFPB found that some companies promoted low interest rates that “may have misled consumers about the terms of the product actually offered.” Misleading loan terms and rates is another common violation of mortgage marketing regulations and compliance standards, even today in 2016.
- Potentially misleading statements concerning the costs of reverse mortgages: This was a major focus of the agency’s sweep. They found that advertisements for reverse mortgages often claimed that the borrower would have no payments, even though borrowers who use these products are “commonly required to continue to make monthly or other periodic tax or insurance payments, and may risk default if the payments aren’t made.”
- Potential misrepresentations about the amount of cash or credit available: Last but not least, the agency’s crackdown focused on mortgage advertisements that contained a mock check, as well as ads that suggested the consumer had been pre-approved to receive a certain amount of money. According to the agency, “additional steps would customarily need to be completed before the consumer would qualify for the loan.”
As you can see, mortgage marketing compliance often comes down to honesty and common sense. Don’t use language that could be considered misleading. Don’t promise rates and terms the borrower might not qualify for, or that you can’t actually deliver. Don’t misuse the term “fixed” in relation to mortgage products. Avoid bait-and-switch techniques, and misleading headlines or offers. Use common sense.
Disclaimer: This is a quick overview of mortgage marketing regulations, rules, and compliance standards for 2016. You might want to include these items in your mortgage marketing checklist. Please note that we are not lawyers or compliance specialists. Most of the information above was adapted from official guidelines and expressed in our own words. To learn more about this subject, please refer to official sources such as the FTC and the CFPB.
Our Services Comply With Federal Regulations
Our content marketing services are, by nature, fully compliant with federal rules and regulations. We help our clients attract home buyers and mortgage shoppers online, by publishing high-quality educational content online (articles, news, etc.). Not only is this a compliance-friendly approach to marketing — it’s also more effective than many other strategies.
Our services are based on a concept we refer to as “pull” marketing:
- If you send an unsolicited advertisement to someone in the mail, you are engaging in “push” marketing. You are pushing your message in their face, even though they didn’t ask for it.
- Website content marketing strategies, on the other hand, involve pulling the consumer to your website. With this strategy, you are connecting with people when they’re actually in the process of shopping for a loan.
People who find your website when conducting online research will be more receptive to your message — and more likely to contact you — than someone who gets a letter in the mail.
You can learn more about our content marketing services on this page. If you have questions about it, please send us an email.