FTC Issues Proposed Mortgage Advertising Rules

The Federal Trade Commission issued a proposed rule would prohibit all material misrepresentations in advertising about consumer mortgages, allow civil penalties, and allow enforcement by the states.


The Federal Register Notice is available at:
http://www.ftc.gov/os/fedreg/2010/september/100922mortgageadvertising.pdf

The proposed rule lists 19 examples of misrepresentations about fees, costs, obligations, and other aspects of credit that would be violations. However, the proposed rule does not include any advertising disclosure requirements.

The proposed rule would apply to: (1) mortgage lenders, brokers, and servicers; (2) real estate agents and brokers; (3) advertising agencies; (4) home builders; (5) lead generators; (6) rate aggregators; and (7) other entities under the FTC’s jurisdiction.

As you may recall, currently under the FTC Act, the Commission may bring actions against those under its jurisdiction who engage in deceptive mortgage advertising, and seek injunctive relief against them. Under the proposed rule, the FTC would be able to bring actions against violators to seek civil penalties in addition to injunctions. The proposed rule would also allow the states to bring actions for civil penalties for violations of the rule.

The FTC is seeking comments about the proposed rule’s costs and benefits, including whether any alternatives would adequately protect consumers at a lower cost. The FTC seeks public input on whether there are advertising disclosures that the Commission should include in the rule. The FTC also seeks public comment on whether the rule should include a provision that prohibits persons from providing substantial assistance to those who violate the rule.


The Notice of Proposed Rulemaking has a 45-day public comment period ending November 15, 2010.