MAP-ing out new mortgage protections

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It’s called the MAP Rule — and it will help chart the course for people in the market for a mortgage by banning deceptive claims about mortgages in advertising and other commercial communications. If you’re in the mortgage business, it’s worth your time to find out more about the rules of the road.

Following up on new laws, the FTC asked for public comment last year on a proposed rule aimed at curbing deceptive practices in mortgage advertising. After reviewing what people had to say, the FTC issued the Mortgage Acts and Practices – Advertising Rule, which will take effect on August 19, 2011. The Rule is designed to create a level playing field for legitimate businesses to compete in the mortgage marketplace.

Does the Rule apply to your business? Yes, if you advertise mortgages and your company is within the FTC’s jurisdiction. That covers mortgage lenders, brokers, and servicers, real estate agents and brokers, ad agencies, home builders, lead generators, rate aggregators, and the like. No, if you work for a bank, thrift, federal credit union, and other entity outside the FTC’s jurisdiction.

The MAP Rule lists 19 examples of prohibited deceptive claims ranging from misrepresentations about fees, costs, and interest rates to unsubstantiated representations about a homeowner’s ability to refinance a mortgage. The Rule parallels the FTC Act’s long-standing ban on false and misleading claims and will allow the FTC to seek appropriate relief — including civil penalties against violators.

The Consumer Financial Protection Bureau and state law enforcers also may bring actions to enforce the Rule. The FTC’s rulemaking authority for the Rule has been transferred to the CFPB as of July 21, 2011, but the FTC, the CFPB, and the states all will have authority to enforce it.

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