Mortgage Acts and Practices (“MAP”) Rule – Advertising Disclosure

BROKER RISK MANAGEMENT

WEEKLY PRACTICE TIP

Mortgage Acts and Practices (“MAP”) Rule – Advertising Disclosure

DO YOU HAND OUT “RATE SHEETS” OR MORTGAGE INFORMATION TO THE PUBLIC OR CLIENTS?  If so, this affects you.

The Federal Trade Commission, those brilliant folks who bought us the MARS fiasco, are busy once again, bringing us the “MAP” rule which stands for Mortgage Acts and Practices – Advertising Disclosure Rule.

BACKGROUND:  In 2009, Congress directed the FTC to promulgate rules regarding mortgage loans in the wake of all of the mortgage fraud, etc.  The FTC’s MAP rule became effective on August 19, 2011 and is designed to prevent deceptive advertising claims about mortgages.  It applies to basically all financial entities that advertise mortgages – mortgage lenders, brokers, and servicers; real estate agents and brokers; advertising agencies; home builders and others. The Rule, however, does not cover banks, federal credit unions, and other entities which are not within the FTC’s jurisdiction.

WHAT “MAP” DOES:  MAP identifies nineteen examples of prohibited deceptive claims, including any misrepresentations regarding:

• the type of mortgage offered;

• the existence and the amount of fees or costs to the consumer connected with the mortgage;

• the variable interest rates, payments, or other mortgage terms;

• the terms or payments of taxes or insurance associated with the mortgage; and

• the consumer’s ability or likelihood of obtaining a refinancing or modification of a mortgage or any of its terms.
  

HOW DOES THIS AFFECT REAL ESTATE AGENTS:  This rule can affect real estate agents any time an agent hands out information about a lender’s programs, such as “rate sheets.”  Often, agents will distribute a mortgage broker’s rate sheets at open houses for a mortgage broker with whom that agent has a good working relationship, or for a lender for whom their brokerage has a working arrangement or partnership.

THE RISK:  The risk is that an agent hands out to the public information about mortgage program or rate sheets which were prepared by the mortgage broker or lender and which contain misleading or wrong information.  The unsuspecting agent could become subject to the MAP enforcement rules, unless there is some disclaimer separating that agent from the representations.

ENFORCEMENT:  The Rule allows the FTC to seek relief, including civil penalties, against those who engage in deceptive mortgage advertising.  Recently the FTC’s authority regarding the MAP Rule transferred to the CFPB, but the FTC, the CFPB, and the states all will have authority to bring actions to enforce the Rule.

FOR MORE INFORMATION:  Go to:  http://www.ftc.gov/opa/2011/07/mortgageads.shtm

PRACTICE TIP:  When distributing to the public or to clients any information about loans, their terms or availability, agents should place the following disclaimer, in text at least as large as the body text, in a location so that the disclaimer is readily apparent to the consumer receiving the mortgage information.

“This communication is provided to you for informational purposes only and should not be relied upon by you. [Name of brokerage] is not a mortgage lender and so you should contact [entity providing mortgage product(s) identified] directly to learn more about its mortgage products and your eligibility for such products”