The Federal Trade Commission (FTC) moved to strengthen its enforcement program aimed at preventing deceptive mortgage advertising, proposing a rule that would ban misrepresentations for all mortgages and would allow the FTC and the states to seek civil penalties against those who violate the rule.
The proposed rule would prohibit all material misrepresentations in advertising about consumer mortgages. It lists 19 examples of misrepresentations about fees, costs, obligations, and other aspects of credit.
The rule 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.
The agency’s enforcement program has included many cases against mortgage lenders, brokers, and others for allegedly deceptive mortgage advertising.
The proposed rule would make the FTC and other law enforcers more effective in combating deceptive advertising. Currently, under the FTC Act, the agency may bring actions against those under its jurisdiction who engage in deceptive mortgage advertising. Under the proposed rule, the FTC would be able to bring actions against violators to seek civil penalties in addition to injunctions.
The FTC is seeking comments about the proposed rule’s costs and benefits, including whether any alternatives would adequately protect consumers at a lower cost.