CFPB Takes Action Against Mortgage Company for Deceptive Advertising

Don’t be the Next Company in a court caption that says “United States of America Consumer Financial Protection Bureau vs. Your Mortgage Company Name”.

There’s things your company can do now to avoid being the next headline and incurring the cost and penalties involved with a consent order related to Deceptive Advertising.

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We provide a list of the items that the CFPB will require you to perform in a Consent Order when your company gets caught engaging in deceptive advertising.

Your Company should have policies and procedures in place that meet the below requirements.

If you review this list and find that your Company is missing the mark, now is the time to take action and improve your Advertising Compliance Policies and Procedures.

Use this list below to get motivated and to double check that your mortgage company knows how to advertise loans and has the necessary and appropriate policies, training and personnel in place to run an effective mortgage advertising review program.

Don’t get ordered to pay a $400,000 penalty.  Review this List of Items test your company’s readiness for a review by the CFPB or your state regulators.

Here’s what the CFPB required a mortgage lender to do to fix problems with their mortgage advertising compliance at the company:

  • Enter into a two year monitoring plan with reports that you must send in to the CFPB to see you are complying with the terms of the consent order
  • Agree to provide a comprehensive Compliance Plan with the following components:
    1. Submit a comprehensive compliance plan designed to ensure that your company’s advertising of mortgage products complies with the terms of the Consent Order.
    2. Compliance Plan must detail the steps for addressing each action required by the Consent Order.
    3. Create new detailed policies and procedures that describe your company’s process for reviewing each advertisement for Create a comprehensive advertising policy and procedures for evaluating all advertisements for compliance with the Mortgage Acts and Practices Act – Advertising Rule (“MAP Rule” or “Regulation N”) and the Consumer Financial Protection Act of 2010 (“CFPA”) before publication.
      1. Policy should require that each review is documented, including when the review was performed and who conducted the review.
      2. Policy should require that your company review scripts for all telemarketing calls related to your sale of mortgage products.
    4. Create a process to review all existing mortgage ads currently in circulation for compliance with the MAP Rule and the CFPA.
    5. Policy must describe your company’s consumer compliance organizational and reporting structure.
    6. Policy must include a written description of the job duties of all employees with duties under the advertising compliance policy. The written description shall include over whom each employee has authority and to whom each employee reports.
    7. Policy must include a requirement that your company allocate resources to compliance to ensure that your company implements adequate compliance programs including appropriate staffing levels with qualified and experienced personnel.
    8. Policy must include a requirement that your company provide mandatory ongoing education and training in Federal consumer financial laws and the provisions of your company’s Consent Order. The training must be appropriate for each individual’s responsibilities and duties; training activities must documented and training programs reviewed and updated at least annually to ensure that appropriate personnel are provided with the most relevant and pertinent information; all new employees of the company must complete this training before communicating with any consumer about a mortgage product.

So what do we learn from this?  Get your act together now to make sure you do not fall into this trap. If you need more information, purchase my How to Advertise Mortgage Loans Guide. You won’t be disappointed with your purchase and the Guide will give you the background knowledge to help your company build a robust advertising review program to avoid this type of enforcement action.