FTC Settles First Mortgage Advertising Rule Enforcement Action

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The Federal Trade Commission recently announced a settlement of its first enforcement action under its Mortgage Acts and Practices - Advertising Final Rule (MAPR). The MAPR, which was recodified as Regulation N, prohibits misrepresentations in mortgage advertising and imposes record-keeping requirements on mortgage advertisers.

The FTC's action was brought against "one of the nation's largest refinancers of veterans' home loans," according to an FTC press release announcing the settlement. The FTC charged the company with violations of the MAPR and the FTC's Telemarketing Sales Rule (TSR) regarding its marketing of refinancing services to current and former military service members. The FTC can seek civil penalties under the FTC Act of up to $16,000 for each violation of either rule. The settlement requires the company to pay a civil penalty of $75 million, which, according to the FTC's press release, is the largest fine the FTC has ever collected for TSR violations.

The FTC's complaint alleged that the company had violated the MAPR by making various misrepresentations about available loan products and its government-related status in telemarketing calls. It also alleged that the company violated the TSR by interfering with the right of consumers to be placed on an entity-specific "do not call" list and making calls to consumers who were on the company's "do not call" list and the National Do Not Call Registry.

The FTC shares enforcement jurisdiction for the MAPR with the Consumer Financial Protection Bureau. In November 2012, the FTC and the CFPB jointly announced that they had each sent warning letters to mortgage advertisers urging them to review their marketing materials to ensure compliance with the MAPR. Those actions resulted from the agencies' review of advertisements across the country for mortgage loans, refinancings, and reverse mortgages that appeared in a variety of media including websites, Facebook, direct mail, and newspapers.