FOR IMMEDIATE RELEASE:  October 17, 1985

         FTC EFFORT INCREASES VOLUNTARY COMPLIANCE WITH
               REAL ESTATE CREDIT ADVERTISING LAWS

     The Federal Trade Commission today released a staff report
stating that compliance by real estate advertisers with federal
credit advertising laws in major newspapers in 42 cities has
risen to 90 percent, up from 86 percent in early 1984, as a
result of a continuing FTC effort.
     Since January 1983, when the compliance rate was below 20
percent, more than 4,000 companies have voluntarily modified
their newspaper ads to correct violations of the Truth in Lending
Act (TILA).
     The program is designed to increase compliance with the
federal law, which requires advertisers to provide consumers with
information that allows them to compare credit terms.  Under the
law, advertisers may not use certain credit terms without making
additional disclosures.  For example, if an ad states an interest
rate, it must also give the annual percentage rate, representing
the total cost of credit.
     The FTC staff monitors newspaper ads in 42 cities to
identify ads that are not in compliance.  Since the program
began, the FTC staff has reviewed more than 250,000 ads, sent
more than 7,600 letters and phoned more than 10,000 advertisers.
     According to the new report -- the third since the project
began -- the compliance rate is 90 percent overall and 95 percent
for companies the FTC staff has contacted at least once during
the program.  In addition, 97 percent of the 500 largest builders
in the country operating in the cities the FTC monitors are in
compliance as a result of the program.  The staff said the
program may have a "multiplier" effect, because many advertisers
it contacts will correct their advertising nationwide and because
smaller builders often use ads from large builders as a model for
their own ads.
     The staff noted that some companies have continued to
violate the law despite its efforts to secure voluntary
compliance.  In the first case stemming from the program, Nash
Phillips/Copus Inc., a large Texas-based developer, agreed in
June to pay $300,000 in civil penalties to settle charges it had
violated the TILA.  Other investigations are underway.
     The report also indicates that recent developments in real
estate credit advertising have increased competition within the
industry, resulting in more financing options for consumers.  The
FTC staff said that the deregulation of financial institutions
and the development of technology has encouraged new entrants
into the market, including large insurance companies,
stockbrokers and credit unions.  One of the most significant
changes, according to the staff, has been the arrival of the
adjustable rate mortgage.  As a result of these changes, many
advertisers have had to become much more knowledgeable about
financing terms and how to advertise them correctly, the FTC
staff said.

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     Copies of the staff report, which is entitled "Real Estate
Credit Advertising Compliance Project/A Status Report to the
Chairman" are available from the FTC's Public Reference Branch,
Room 130, 6th St. and Pennsylvania Ave. N.W., Washington, D.C.
20580; 202-523-3598; TTY 202-523-3638.

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MEDIA CONTACT:   Mario A. Baldessari, Office of Public Affairs,
                 202-523-1585

STAFF CONTACT:   Sarah Jane Hughes, Bureau of Consumer
                 Protection,
                 202-724-1182

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