The Consumer Financial Protection Bureau and the Federal Trade Commission launched six formal investigations of lenders, suggesting the firms may have violated the law by releasing misleading mortgage ads. A dozen other firms received warning letters about their advertising practices this week.
The agencies announced Monday that the six companies under the bureau’s lens are being checked out for serious violations of the law. The probes focus on a myriad of advertising practices, especially those targeting senior citizens and members of the military.
The practices drawing scrutiny include alleged misrepresentations about the products potentially having government affiliations, inaccurate information about interest rates and potentially misleading comments about the cost of reverse mortgages and the amount of credit or cash available to a borrower.
The letters mailed and the launched investigations stem from the CFPB and the FTC’s review of 800 randomly selected mortgage ads released across the country. The ads were for mortgage loans, refinancing programs and reverse mortgages, the CFPB said. All of the ads reviewed came from newspapers, the Internet and mass-mail solicitations.
Any investigation that leads to a finding of fault will be tied back to the 2011 Mortgage Acts and Practices Advertising Rule, which governs mortgage advertising standards.
The CFPB and FTC claim some of the reviewed products for reverse mortgages promised no payments to borrowers even though reverse mortgages generally come with monthly payments or tax and insurance payments.
Other ads may have promised pre-approval for a certain loan amount even though the person had additional steps to take to become qualified.