Mortgage Acts and Practices Act TIP Sheet IMU

1 2012 Indecomm Mortgage U Page 1 of 8 Mortgage acts and Practices Act (MAP) Advertising Rule (Regulation N) Tip Sheet Keep in mind we are not a law firm and this is not legal advice. All advertising should be reviewed by an attorney prior to distribution. First and foremost is that all companies with a website, Facebook or other internet presence are advertising in a commercial space. The website in particular must be checked for compliance with the act. So, don t think you don t advertise. What Is MAP?

2 MAP was issued pursuant to the 2009 Omnibus Appropriations Act as clarified by the Credit Card Accountability Responsibility and Disclosure Act of 2009 and applies only to non depository Mortgage lenders, state chartered credit union, and entities that market and advertise Mortgage products are not Mortgage lenders such as Mortgage brokers, real estate brokers, advertising agencies, lead generators and rate aggregators. The MAP Rule sets specific deceptive acts and Practices in the advertising of Mortgage loan products and prohibits misrepresentation in any commercial communication concerning terms of Mortgage loan products.

3 This includes internet, radio, billboards, print and television advertising. Who regulates this? The FTC was the original regulator and now the CFPB has authority to bring law enforcement actions and seek civil penalties against the entities subject to the rules. Federally regulated entities should not expect to be off the hook as their regulators are also watching all advertising. What are the specific rules? The company must have a written policy that insures compliance with the regulation. We recommend the policy cover the definitions and intent of the regulation as shown in these tips and include the procedures used to review the ad for compliance.

4 The policy should also state that documents describing the products and services available at the time of the ad are maintained for at least 24 months. Advertising and marketing must be truthful and non misleading. Advertising is considered deceptive (FTC Deception Policy Statement of 1984) if: There is a representation, omission of information, or practice that is likely to mislead consumers acting 2012 Indecomm Mortgage U Page 2 of 8 reasonably under the circumstances; and (2) that representation , omission, or Practices is material to consumers.

5 O The representation may be expressed or implied o Reasonableness is evaluated based on the sophistication and understanding of consumers in the group to which the representation is targeted, which may be a general audience or a specific group such as the elderly. o A disclaimer or qualifying statement may correct a misleading impression, but only if it is sufficiently clear and prominent to convey the qualifying information. The rule warns that many reasonable customers do not read an entire ad and fine print may not qualify as clarification if it is too small or brief.

6 O Information in the text does not automatically remedy a false headline. Sections of the act describe specific violations but the rules states these sections are not exhaustive of all possible violations. The sections in the rule bar misrepresentation of: Interest charged for the product The APR, simple annual rate, periodic rate or any other rate including a payment rate The existence, nature or amount of fees or costs associated with any Mortgage credit product. Prohibits false or misleading claims that o fees are charged.

7 This includes fees charged throughout the life of the loan. Terms associated with additional products or features that may be sold in conjunction with a Mortgage product Taxes or insurance associated with a Mortgage credit product The existence or amount of any penalty for making prepayments on the Mortgage The variability of interest, payments or other terms of the product Comparisons between rates or payments including but not limited to comparisons involving savings The type of product being offered The amount of the obligation or the existence.

8 Nature or amount of cash or credit the consumer could receive from the loan 2012 Indecomm Mortgage U Page 3 of 8 The existence, number amount or timing of any minimum or required payments (ie: reverse mortgages0 The potential for default on the product including default for nonpayment of taxes or insurance The effectiveness of the product in helping consumers resolve problems in paying debts. This includes false or misleading claims the lender s or servicer s product (through waiver, forgiveness or otherwise))

9 Can reduce, eliminate or restructure a debt or any other obligation The association between a product or provider of the product and any other person or program, or entity The source of the Mortgage product such as the communication is on behalf of the current servicer, when it is not The consumer s right to reside in the dwelling including false or misleading claims about how long or under what conditions a consumer can stay in the dwelling The consumer ability or likelihood to obtain any Mortgage credit product or term or a refinancing or modification The availability, nature or substance of counseling services or any other expert advice offered to the consumer regarding the product including the qualification of those offering the services or advice.

10 In other words, don t reference counseling services. The rule specifically states that a company is not required to provide a disclosure related to these advertising rules. However, TILA still requires the ARM disclosure and Consumer Handbook On ARMS provided AT application. Record retention includes keeping or being able to retrieve copies of all website information including footers and links available at all times. For example if a regulator asks for information about the advertising of an adjustable rate loan program, the complete information available at the time must be reproduced including the rates, terms, conditions, costs etc.