CFPB, FTC examine mortgage ads
Are mortgage ads returning to pre-crisis form now that the mortgage crisis has eased and the economy is picking back up?
That's a fair question, and a consortium of regulators, led by the Consumer Financial Protection Bureau and the FTC, has opened an investigation into the mortgage ad practices of 19 companies, including some ads that have appeared on Facebook. The CFPB and the FTC also announced they had sent letters to 32 companies saying that they may be violating the Mortgage Acts and Practices Advertising Rule, which went into effect in August 2011.
Many of these potentially misleading practices seem to be directed at older Americans and service members or veterans, according to the two agencies. Examples of dubious ads that might be misleading include those with official-looking seals or logos that imply some kind of government status, for example making you think they come from the VA or HUD; promises of amazingly low rates; false promises for reverse mortgages; statements that recipients are "pre-approved."
Mortgage ads are very much like used-car lot ads. People tend to laugh at the marketing gimmickry involved. That said, such ads air for a reason -- they tend to work in terms of bringing in unsuspecting customers for dubious mortgages, often these customers are least able to afford them.