September 9th, 2011 at 11:47 pm
The Federal Trade Commission’s Mortgage Acts and Practices – Advertising Rule took effect on August 19, 2011. The Rule is designed to protect consumers from misleading or deceptive advertising regarding mortgage products. Unfortunately, the Rule’s language is broad enough to cover our agents and their communications whenever they provide information to clients about home mortgages. Specifically, the Rule prohibits “any material misrepresentation, expressly or by implication, in any commercial communication, regarding any term of any mortgage credit product.” Because of the Rule’s broad definitions, this prohibition can be read to cover
anything an agent says to a consumer regarding a mortgage. For example, anything mentioning current mortgage rates, monthly payment information for a listed home, or specific loan products would be covered by the Rule. The Rule covers e-mails, open house flyers, marketing pieces or statements on websites and social media. Of course, we have always avoided making any kind of misrepresentation, so that prohibition will not require any change in practice. What is new, however, are the Rule’s recordkeeping requirements. Specifically, the MAP Rule requires that our agents keep all communications they make or disseminate regarding mortgage products for a period of
two years after the last time the communication was made. It also requires that we keep a record of the actual mortgage products that were available during the time any communication was made concerning these products. In other words, you have to maintain both your advertisement and proof that the products you advertised were actually available. In this regard, we have spoken with HomeServices Lending and they have promised to maintain a record of the products they offer for the required time period. As a result, if our agents communicate regarding an HSL product, they only need to keep their communication, not a record of the product itself. HSL will do that for them. On the other hand, if they advertise another lender’s product, they will need to keep both the advertisement and a record of the product. So, please create a new file in your cabinet and put everything that mentions mortgage, or any term of a mortgage, in it for two years. As always, let us know if you have any questions.
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