FTC Seeks to Ban Deceptive Mortgage Ads and Allow Civil Action Against Violators

A new proposal from the Federal Trade Commission would ban misrepresentations for all mortgages and allow the agency and states to seek civil penalties against those who violate the rule.

According to the FTC, the move is meant to further strengthen its longstanding enforcement program and make the agency more effective in combating deceptive advertising.  The proposed rule would prohibit all material misrepresentations in advertising about consumer mortgage products, including reverse mortgages.

The proposal lists 19 examples of misrepresentations about fees, costs, obligations, and other aspects of credit that would be violations.  The rules would apply to mortgage lenders, brokers, and servicers, real estate agents and brokers, advertising agencies, home builders, lead generators, rate aggregators; and other entities under the FTC’s jurisdiction.


According to the proposal, companies would have to retain copies of all sales scripts, training materials, related marketing materials, websites and weblogs, and various other documents describing mortgage products being sold to consumers, be retained for a period of 24 months to ensure compliance with the rule.

Currently, under the FTC Act, the Commission may bring actions against those under its jurisdiction who engage in deceptive mortgage advertising, and it may seek injunctive relief against them. Under the proposed rule, the FTC would be able to bring actions against violators to seek civil penalties in addition to injunctions. The proposed rule would also allow the states to bring actions for civil penalties for violations of the rule.

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  • Is this the full compliance employment and FTC enforcement division initiative or what?

    Obviously the FTC does not believe that the mortgage industry has done enough to police itself. Will this be the roar of the toothless tiger or does the FTC intend on enforcing all of these rules? It seems violations are concentrated in a few companies.

  • I look forward to FTC acting on loan misrepresentation!!!! Who will benefit? Many states have had regulations in force for years. The FTC and States, in previous years, did not act on misrepresentation of Sub-prime loans, Option ARM loans, etc.

    Many loans, not in the borrowers best interest along with other stated income loans, were and still are allowed by the Government, and – – – “now they are going to act?”

    Surely they?, someone in power?, maybe?, hopefully???? – FTC and the powers that be, will consider “the cost of another Government hiring program” to enforce their desire to protect the U.S. citizen from using the loan programs approved by the Government Administration today and the Government Administration programs, still in existence, from the past several Administrations. Oh yeah!

    Maybe it is time for the enforcers, as employees of FTC, take the NMLS/SAFE course and testing before enforcing any regulations. It is important, for the future of the borrower, that those that enforce regulations understand that which they enforce.

    • Nice point – “It is important, for the future of the borrower, that those that enforce regulations understand that which they enforce”…….

      That is so totally true.

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