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2011 NH/VT Mortgage Compliance Conference. Advertising Compliance Best Practices . Ben Niles, Risk Manager [email protected] 603-606-3272 603-305-0590 (C). Advertising Regulations. Federal Trade Commission Fair Lending Federal SAFE Act State (NH & VT) SAFE Act

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2011 NH/VT Mortgage Compliance Conference

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2011 nh vt mortgage compliance conference

2011 NH/VT Mortgage Compliance Conference

Advertising Compliance

Best Practices

Ben Niles, Risk Manager

[email protected]


603-305-0590 (C)

Advertising regulations

Advertising Regulations

  • Federal Trade Commission

  • Fair Lending

  • Federal SAFE Act

  • State (NH & VT) SAFE Act

  • RESPA Sec 8: Kickbacks

  • Note: CFPB will combine/rewrite these Regs

Penalties for violations

Penalties for Violations

  • FTC (fraudulent, unfair, & deceptive business practices): Almost No Limit

    • Countrywide: $108M; Empire Mortgage: $1.5M

    • Note: FTC does not regulate banks & credit unions

  • Fair Lending: AIG $6.1M. DOJ has 18 active investigations & 50 referrals

  • Reg B- ECOA: Actual damages + $10,000 punitive damages

    • Class Action Liability: Lesser of $500,000 or 1% of Creditor’s net worth

  • Federal SAFE Act: LO- $25,000 fine for unfair, deceptive, unethical, & fraudulent business practices; consumer has 6 yrs to file a complaint

Penalties for violations1

Penalties for Violations

  • NH/VT SAFE Act: LO- $25,000 fine for unfair, deceptive unethical, & fraudulent business practices

    - Consumer has 6 yrs to file a complaint

  • RESPA Sec 8: Fine of $10,000 &/or 1 Yr Prison Term

    - Civil Penalty of 3 X illegal kickback

  • Reg Z TILA: MDIA increased civil penalty to $400/$4,000 min/max per occurrence

    - Class Action Liability: lesser of $500,000 or 1% of Creditor’s net worth

Advertising best practices

Advertising Best Practices

  • Written Advertising Policy

  • Approval of All Advertising

    • Business cards

    • Print, newspaper & magazines

    • Flyers & brochures, newsletters

    • Radio & TV ads

    • Email ads

    • Internet Websites

    • Social Media

    • Telemarketing

    • Lead Generators

  • Maintain Records

Advertising general rules

Advertising: General Rules

  • LO NMLS ID # immediately after or under name

  • Include both Lender & LO NMLS ID #’s

  • Trigger terms require full disclosure of loan terms

  • All words & logos must be legible, clear, & conspicuous

  • Fine print should be avoided

  • Content must be accurate, fair, & balanced

  • “Equal Housing Lender” logo or verbiage required

Advertising general rules1

Advertising: General Rules

  • Address in advertising must match the address on license (branch location)

  • LO home address is never allowed

  • If rent is paid for business space, license must be for that location

  • License number must be displayed on all media- business cards, flyers, brochures, print ads, email signatures, websites, social media sites, etc

Advertising general rules2

Advertising: General Rules

  • LO’s licensed in multiple states, list all states where ads appear (circulation)

  • State specific disclosures

    • NH: “Licensed by the New Hampshire Banking Department”

    • RI: “Rhode Island Licensed Lender”

    • MA: “MA License #”

Advertising disclaimers

Advertising: Disclaimers

  • Subject to underwriting (credit) approval

  • Terms & conditions may change without notice

  • We arrange but do not make loans (Brokers)

Advertising interest rate ads

Advertising: Interest Rate Ads

  • APR with interest rate, same font or larger

  • Only: APR is acceptable

  • Only: APR and Rate is acceptable

  • Trigger terms will require full disclosure of financing terms

Advertising trigger terms

Advertising: Trigger Terms

  • Trigger terms requiring full disclosure

    • amount or % of down payment

    • amount of payment

    • number of payments

    • term of repayment

    • amount of finance charge

    • ARMs: include payment caps, max rate & payment, frequency of rate change, index, & margin.

  • Exception: “100% VA Financing”

Advertising broker

Advertising: Broker

  • Acting as a Broker- ad must say:

    • “We arrange but do not make loans”

    • MA: “MA Broker License #

    • CT: “Mortgage Broker Only, not a Mortgage Lender or Mortgage Correspondent Lender”

Advertising reverse mortgages

Advertising: Reverse Mortgages

  • Can not say “no payment”

  • Must include tax & insurance information

  • Don’t use misleading/deceptive wording:

    • Government Program, Government Benefit

    • Government Insured, Government Guaranteed

  • Use “FHA Insured Mortgage”

  • Ads should be complete, fair, & balanced

Prohibited deceptive advertising

Prohibited/Deceptive Advertising

  • Bait & switch advertising

  • False or misleading statements

  • “No Points” when points are required

  • “Bad Credit, No Problem”, without disclosing details- such as higher rate & fees

  • “Avoid Foreclosure” in your ad

  • “Tax Deductibility” in you ad

Prohibited deceptive advertising1

Prohibited/Deceptive Advertising

  • “Immediate Approval” in your ad

  • “Pre-Approvals” as a Broker

  • “Fixed” in an ARM loan (5/1 as fixed rate)

  • Using the ARM “teaser rate” without rate & payment changes

  • “Government Loans” & not FHA or VA

  • “Debt Elimination”

Prohibited deceptive advertising2

Prohibited/Deceptive Advertising

  • Advertising yourself as a “Loan Counselor”

  • Using facsimile of currency or a check

  • Using official government business format or language

  • Not identifying yourself and your company in telemarketing calls

Business cards

Business Cards

  • LO NMLS # next to or just below name

  • Company or Branch NMLS# at bottom

  • Cell Phone- # yes, home landline- no

  • State specific disclosures: MA, ME, NH, RI

    • See General Rules (Slide #8)

Internet advertising

Internet Advertising

  • Follow general rules (Slides #6-8)

  • Collecting non-public personal info:

    • Website must be secure (encryption)

    • Website must display “security logo”

  • If website takes an application:

    • Include electronic signature verbiage

    • Include consumer acknowledge



  • Follow general rules (Slides # 6-8)

  • E-Sign compliance required

  • Security & Logo if non-public info collected

  • Maintain & keep site up-to-date

    • Products, programs, requirements, staff, LO’s

  • Follow “trigger disclosure” requirements

  • Include “privacy disclosure”



  • Include info about your bank or company:

    • Company history

    • How you do business

  • Consumer Acknowledgement:

    • “I authorize ABC Bank and/or assigns to check my credit, employment history and information in this application for the purpose of determining my credit worthiness. I acknowledge this information is confidential.”

Email signatures

Email Signatures

  • Name, Title, LO NMLS#,

  • Bank or Company name & NMLS#

  • Business address, telephone numbers, fax

  • Email & website addresses

  • Confidential & privileged information statement

  • OPT OUT provision

Respa section 8

RESPA Section 8

  • Joint advertising- realtors & builders

    • Cost is shared proportionally based on space

  • Events, i.e. - homebuyer workshop

    • shared cost

    • both are presenters

  • Kickbacks: Prohibits gifts of anything of value unless services are rendered

    • Prohibits paying for referral or fee splitting

  • Keep records of the “sharing costs”

Printed materials

Printed Materials

  • Follow General Rules (Slides 6-8)

  • Review text & graphics for accuracy, fairness, balance, & appropriateness

  • Avoid negative comparisons to competition

Radio tv


  • Review “hard copy” of script for compliance

  • Speed & volume of radio voice should be constant

  • Avoid fine print & “flash graphics” in TV ads

  • Retain copy of script in your records

  • Include NMLS #’s

  • Provide toll-free telephone number

  • State that the number may be called for additional cost information



  • Recommend that “trigger leads” be prohibited

  • Scrub leads against Do Not Call Lists

    • MMC uses Gryphon Networks

  • Recommend that spam email be prohibited

  • Spam fax is illegal unless you have prior consent

  • All telemarketing employees must be licensed or registered Loan Officers

Telemarketing existing customer

Telemarketing: Existing Customer

  • Closed a loan within past 18 months

  • Inquiries within past 3 months

  • Recommend you have “Opt In” for solicitations

  • Over-rides Do Not Call Lists

Telemarketing new customers

Telemarketing: New Customers

  • Cold Calling:

    • Scrub call lists against Do Not Call Registry

    • Info you must provide:

      • Your name

      • Company name, address, email & phone #

      • Contact person, other than yourself

      • Comply with all disclosure Regs for Rates & APR

      • Call between 8 AM & 9 PM

      • Keep a log for 5 years

      • NH prohibits “computer generated calls”

Lead generation companies

Lead Generation Companies

  • Should be approved prior to use

  • Companies must be fully vetted

    • review contract or agreements

    • review & approve all materials, i.e. - scripts, mailers, internet ads, banner ads, etc

  • Active or live solicitation & collecting consumer info is “solicitation”: Licensing issue

  • Passive leads from mining public data-bases is OK: no contact with the consumer

Social media

Social Media

  • Facebook, My Space, Twitter, LinkedIn, Blogs, You Tube, Plaxo, etc

    • Should be approved prior to use

    • You are advertising- follow the policies

    • Include NMLS #’s, etc

    • Avoid “trigger terms”

    • Keep it professional: no political rants on your Blog

    • Include a privacy notice



  • The content of this presentation is for information purposes only. I am not an attorney and am not providing legal advice.

  • It is recommended that you also seek guidance from your legal counsel for compliance issues and questions.



Ben Niles, Risk Manager

Merrimack Mortgage Company


603-305-0590 (C)

[email protected]

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