Mortgage Advertising Regulations (MAP Rule)

Mortgage Advertising Regulations (MAP Rule)

• 12 CFR Part 1014 (Regulation N): Federally mandated rule by the FTC, enforced jointly with CFPB, defining and prohibiting deceptive mortgage advertising practices by lenders and brokers.
• Scope: Extremely broad, encompassing all "commercial communications" — written or oral statements, illustrations, or depictions in any medium (print, broadcast, online, etc) designed to influence sales or generate interest in goods/services.
• Misrepresentation Definition: Broad, covering specific examples and general misrepresentations regarding loan terms, benefits, and lender qualifications.
• Loan Term Misrepresentations: False or misleading statements about interest rates, APR, terms, payment schedules, costs, fees, or escrow requirements.
• Loan Benefit Misrepresentations: False or misleading representations about loan comparisons, government assistance, debt restructuring, borrower rights, future refinancing opportunities, or possible outcomes of default.
• Lender Misrepresentations: False or misleading suggestions that the lender is a government entity or endorsed by one, or imply provision of counseling services that aren't offered.
• Other Regulations Enforcement: The MAP Rule incorporates the Truth in Lending Act (TILA) and the SAFE Act advertising requirements and prohibitions.
  • TILA Triggering Terms: Requirements for additional disclosures when specific "triggering terms" are used (down payment amounts, repayment amounts/terms, or finance charges including interest).
  • Additional Disclosures (Triggering Terms): Listing of down payment amounts (dollar/percentage), repayment terms over the full loan term (including balloon payments), APR, adjustable rate loan disclosures of possible future interest rate increases.
  • SAFE Act Requirements: Requires inclusion of company and individual NMLS (National Mortgage Licensing System and Registry) numbers in all advertisements.
• Record Keeping: Advertisers must keep copies of advertisements and related records for 24 months after public appearance.
• Enforcement: Enforced by CFPB & FTC, and State Attorneys General.

Electronic Signatures in Global and National Commerce Act (E-Sign Act)

• Purpose: To ensure the validity and legal effect of electronically signed contracts in interstate and foreign commerce.
• Consumer Consent Requirements: Financial institutions must obtain consent for electronic records/signatures and disclose consumer rights and applications.
• Clear and Conspicuous Disclosure: Detailed disclosure requirements for consumers before consent is given.
  • Disclosure Content: Must include description of rights to receive paper records, possibility of consent withdrawal (conditions, consequences, and fees), application of consent (specific transaction or broader relationship), instructions on consent withdrawal, updates to contact information, provision of a paper copy request process and potential fees, hardware/software requirements for electronic record access.
• Electronic Record Requirements: Financial Institutions need to maintain electronic records that can be reproduced, reflecting contract/disclosure content, accessible for the required period.
• Verification Methods: Requirements for verifying identity, although unspecified (e.g., PINs, email responses).
• Oral Communication Exclusion: Oral communications or recordings are not considered electronic records.

USA PATRIOT Act of 2001

• Purpose: To deter and punish terrorist acts, enhance law enforcement tools, and prevent money laundering.
• Scope: Applies to US and foreign financial institutions, including mortgage lenders and brokers.
• Key Provisions:
  • Enhanced anti-money laundering and financial terrorism measures.
  • Increased scrutiny of international transactions.
  • Reporting requirements and penalties for suspected money laundering or terrorism financing.
  • Strengthened investigative tools (surveillance, financial records access, etc.) for terrorism-related offenses.
  • Updated to reflect new technologies and threats by streamlining the search warrant process, and improving information sharing.
  • BSA/AML Requirements: This includes requirements for establishing anti-money laundering (AML) policies and controls. Also requiring confidential, Suspicious Activity Report (SAR) reporting to FinCEN.
• Identity Verification: Financial institutions must verify customer identity including name, address, date of birth and identification numbers (often SSN). Physical verification using government-issued photo ID or alternative methods (e.g., questions about tax returns/credit reports) for non-physical interactions.

Test your knowledge of the Mortgage Advertising Regulations, particularly the FTC's MAP Rule. This quiz covers the definitions of misrepresentation, loan terms, benefits, and the scope of commercial communications. Gain a clear understanding of deceptive advertising practices in the mortgage industry.