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Two regulators are looking out for you when it comes to mortgage-related ads. The Federal Trade Commission and Consumer Financial Protection Bureau recently announced that they had conducted a joint "sweep" of about 800 randomly selected mortgage ads across the country, including ads for mortgage loans, refinancing and reverse mortgages.
They scrutinized ads in newspapers, on the Internet, in direct mail and email, and from other sources. One of their areas of focus was advertising that targets veterans and service members.
As a result, the regulators launched investigations into 19 companies to determine if their advertisements violated federal law, and they sent warning letters to an additional 32 companies.
The CFPB and the FTC share enforcement authority for the 2011 Mortgage Acts and Practices Advertising Rule, which prohibits misleading claims about government affiliation, interest rates, fees, costs, payments associated with the loan, and the amount of cash or credit available to the consumer.
The companies involved include mortgage lenders and mortgage brokers, home builders, real estate agents and lead generators. This doesn't apply to depository institutions, such as banks and credit unions.
The warning letters sent to the 32 companies cite specific examples of possible violations, such as:
• Suggesting that the company is affiliated with a government agency or government-sponsored program. Some firms used a logo similar to that of the Veterans Affairs Department, prominently displayed a website address that includes the acronym "VA," or used language that states "the VA is offering you," while advertising a product.
VA deals with these potentially misleading marketing practices from time to time, said spokesman Randal Noller. Officials forward information to VA's general counsel and to the Consumer Financial Protection Bureau enforcement division for investigation.
There are no known specific efforts to trademark terms related to VA loans, he said.
• Suggesting that the rate offered is part of an "economic stimulus plan" that will soon expire; VA's loan guarantee programs don't have an expiration date.
• Indicating that a specific fixed rate is available for a 30-year loan when it applies to an adjustable rate.
While regulators are becoming more aggressive in protecting service members' financial interests, you are your own first line of defense. So beware of official-looking logos that resemble government ones, and the use of "VA" in website names.
There are plenty of highly reputable financial institutions, including banks and credit unions, that have a military term in their names.
Just be very careful if you're not familiar with an institution. The fact that companies use the term "military" or "VA" in their names or websites gives the impression that they are military-friendly. Don't be fooled. Make sure you get information in writing about terms — including fees and interest rates — before you agree to any loan.