Last week, the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) issued warning letters to more than 30 non-bank mortgage advertisers informing them their advertisements may be deceptive in violation of the 2011 Mortgage Acts and Practices Advertising Rule. Both agencies also announced the opening of nonpublic enforcement investigations of other advertisers they believe have committed violations of the rule, including six companies that the CFPB thinks may have committed more serious violations.
The CFPB and the FTC share enforcement authority over nonbank mortgage advertisers, such as mortgage lenders, brokers, servicers and advertising agencies for violations of the 2011 Mortgage Acts and Practices Advertising Rule, known as Regulation N. Companies that the CFPB and FTC find have violated prohibitions on misleading advertising could be subject to enforcement actions, including paying civil penalties.
The FTC sent warning letters to 20 companies, comprised of real estate agents, home builders and lead generators. The CFPB issued notices to approximately a dozen mortgage lenders and mortgage brokers regarding potentially misleading advertisements, with a focus on ads targeted toward veterans and the elderly. An example of a warning letter from the CFPB to mortgage advertisers that targeted older Americans is here and an example to mortgage advertisers that targeted veterans and service members can be found here.
These warning letters are a result of a combined effort by the CFPB and the FTC to regulate and enforce Regulation N. It prohibits material misrepresentations in advertising or any other commercial communication regarding consumer mortgages, including misleading claims concerning government affiliation, interest rates, fees, costs, payments associated with the loan, and the amount of cash or credit available to the consumer.
Troutman Sanders' Financial Services Litigation and CFPB Team
Troutman Sanders is an accomplished and experienced leader in providing litigation and regulatory advice to a broad spectrum of financial services institutions. Troutman Sanders' CFPB Team monitors the development and activities of the CFPB on its blog and also advises clients on CFPB and Dodd-Frank issues. Additionally, Troutman Sanders' Financial Services Litigation Group has successfully litigated a wide range of individual and class action claims involving the FCRA, FDCPA, TCPA, and other federal and state consumer protection laws.
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