Mortgage Acts and Practices Act – Regulation N (12 CFR 1014.3)
Introduction: The MAP Act was issued in 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.
Enforcement of the MAP Act was provided to the CFPB in 2011 at which time the MAP Act was published as a new rule known as “Regulation N”.
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.
1. For non-depositories, determine whether advertisements and promotional materials for mortgage credit products contain material misrepresentations, expressly or by implication, of the following:
a. the interest rate charged for the product, including, but not limited to the amount of interest owed each month that is included in the consumer’s payments, loan amount, or total amount due, or whether the difference between the interest owed and the interest paid is added to the total amount due from the consumer (12 CFR 1014.3(a)(1)-(2));
b. the annual percentage rate, simple annual rate, periodic rate, or any other rate (12 CFR 1014.3(b));
c. the existence, nature, or amount of fees or other costs associated with the product, including, but not limited to misrepresentations that no fees are charged (12 CFR 1014.3(c));
d. the existence, cost, payment terms, or other terms associated with any additional product or feature that may be sold with the product, including, but not limited to credit insurance or credit disability insurance (12 CFR (1014.3(d));
e. the terms, amounts, payments, or other requirements related to taxes or insurance associated with the product, including, but not limited to whether separate payment of taxes or insurance are required or the extent to which tax or insurance payments are included in the loan payments, loan amount, or total amount due from the consumer (12 CFR 1014.3(e)(1)-(2));
f. the existence, nature, or amount of prepayment penalties (12 CFR 1014.3(f));
g. the variability of interest, payments, or other terms of the product, including but not limited to misrepresentations using the word “fixed” (12 CFR 1014.3(g));
h. comparisons between rates or payments available for a period less than the full length of the product and actual or hypothetical rates or payments (12 CFR 1014.3(h)(1)-(2));
i. product type, including whether the loan amortizes (12 CFR 1014.3(i));
j. amount of the obligation, or the existence, nature, or amount of cash or credit available to the consumer (12 CFR 1014.3(j));
k. existence, number, amount, or timing of any minimum or required payments, including misrepresentations about whether payments are required in a reverse mortgage or other mortgage credit product (12 CFR 1014.3(k));
l. potential for default, including misrepresentations concerning the circumstances when the consumer could default for nonpayment of taxes, insurance, or maintenance, or for failure to meet other obligations (12 CFR 1014.3(l));
m. product effectiveness with respect to debt reduction, elimination, restructuring, or waiver or forgiveness of the debt in whole or in part (12 CFR 1014.3(m));
n. the affiliation of a mortgage credit product or product provider to a governmental entity or other organization (12 CFR 1014.3(n)(1));
o. the relation of a mortgage credit product to a governmental benefit, or that the mortgage credit product advertised is endorsed, sponsored, or affiliated with any government or other program (12 CFR 1014.3(n)(2));
p. the source of any commercial communication, including but not limited to whether the commercial communication is made by or on behalf of the consumer’s current mortgage lender or servicer (12 CFR 1014.3(o));
q. the right of a consumer to reside in the dwelling subject to the mortgage credit product or the duration of that right, including but not limited to what conditions a consumer with a reverse mortgage can stay in the dwelling (12 CFR 1014.3(p));
r. a consumer’s credit qualifications for a particular product or program, including whether the consumer has been preapproved or guaranteed for any such product or term (12 CFR 1014.3(q));
s. the consumer’s likelihood to obtain a refinancing or modification, including misrepresentations concerning whether the consumer has been preapproved or guaranteed for refinancing or modification (12 CFR 1014.3(r));
t. the availability, nature, or substance of counseling services, including, but not limited to the qualifications of those offering the services or advice (12 CFR 1014.3(s)).
Compliance Tip – Use the above MAP Act as a checklist when reviewing your mortgage ads.
We hope this helps with your review and preparation of your readiness for a CFPB examination that reviews your mortgage advertisements.
Need More Info? By the way, are you looking for free training on how to advertise mortgage loans? Check out our “Beginner’s Guide to Advertising Mortgage Loans”