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Following a sweep that scrutinized about 800 mortgage-related advertisements, federal regulators have launched investigations into 19 companies to determine whether their misleading advertisements may have violated federal law. Some of the ads targeted service members and veterans.
The regulators have sent warning letters to an additional 32 companies, according to officials with the Federal Trade Commission and Consumer Financial Protection Bureau.
Regulators evaluated newspaper, Internet, direct-mail and email ads, as well as ads from other sources, said Thomas Pahl, FTC's assistant director of the division of financial practices. These advertisements could lead consumers to make the biggest mistakes of their lives, said Kent Markus, CFPB's assistant director for enforcement.
The warning letters cite several details in the ads that could mislead service members and veterans, including: a logo very similar to that of the Veterans Affairs Department, the prominent display of a website address that includes the acronym "VA" and the statement that "the VA is offering you" a specific mortgage product. Some ads appeared to be affiliated with other government agencies, such as the Department of Housing and Urban Development or Federal Housing Finance Agency.
In some cases, there were disclaimers in tiny print explaining that the company is not a government agency. In those cases, the fix might be making the disclaimer larger, Pahl said.
Other possible misrepresentations included statements that a specific "fixed" rate was available for 30 years, when the rate was actually an adjustable rate, and suggesting that a rate was part of an "economic stimulus plan" that would expire shortly.
The applicable law is the Mortgage Acts and Practices Advertising Rule, which covers companies such as mortgage brokers, realtors and builders. It does not apply to depository institutions, such as banks and credit unions.