After reviewing over 800 mortgage ads on web sites, Facebook, direct mail, newspapers and other sources, the Federal Trade Commission (FTC) has sent letters to 20 companies warning them that their advertising may be deceptive to the point of being illegal.
The FTC and the Consumer Financial Protection Bureau (CFPB), which sent another dozen warning letters, want the targeted companies to comply with the Mortgage Acts and Practices Advertising Rule, a federal regulation prohibiting making false or unsubstantiated claims in advertising for consumer mortgages or mortgage services. Mortgage advertisers that violate the rule may be required to pay civil penalties.
The consumer watchdog agencies released a series of "mock ads," illustrating the types of hypes and sketchy claims consumers should watch out for in mortgage advertising, such as:
- The ad offers a very low "fixed" mortgage rate, but never mentions any significant terms of the loan. For example, the rate may be fixed for an introductory period only, sometimes as short as 30 days.
- The ad uses statements, images, symbols, and abbreviations designed to make consumers think the advertiser is affiliated with a government agency.
- The ad "guarantees" loan approval with very low monthly payments, but fails to discuss details and conditions of the offer.
You can learn much more about how to identify and protect yourself from deceptive mortgage plan offers by reading the FTC's publications Your Home and Deceptive Mortgage Ads: What They Say; What They Leave Out.