Advertising Rules

Let’s look at an Advertisement for a 10-1 ARM Loan:

This ad has a really big 3.250% Interest rate. That’s low right?  But wait, doesn’t Regulation Z require the APR to be same size font and and apperance as the interest rate?

How’s the disclosure on this advertisement?  Lets look at the back side:

The disclaimer is pretty good:  It has the rate available as of date (August 1, 2014), has the necessary FICO score, indicates that the loan is an ARM and that the payment is subject to change, says max LTV and CLTV, indicates that ad is for no cash out refi, owner occupied, and shows how and when the payment can/will change:

APR is Annual Percentage Rate and is current as of August 1, 2014. Rate based on 10/1 ARM, with no more than 70% LTV and CLTV.  $749 origination fee less a $300 savings …

So what’s the difference between an Advertising Services Agreement and a Marketing Services Agreement?

Well the answer is likely not much. I prefer the term Advertising Services Agreement mainly because it reminds the parties that the purpose of these agreements should be closely refined to paying for true advertising services to promote your mortgage loan services that your mortgage company provides to the public.

Recall the basic rule here – a mortgage lender can pay a realty firm for true advertising services and such payments should represent the reasonable value for the efforts made by the reality firm to promote the mortgage services to consumers who are in the market for a home loan.
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Are your reviewing your ads for compliance with laws, avoiding UDAAP, and making sure fair lending concerns are being considered?