President & Managing Director
Lenders Compliance Group
We are often asked about what is or is not permitted in nonbank advertisements. Many people are aware of the federal guidelines set forth in Regulation Z, the implementing regulation of the Truth in Lending Act. However, some people are not familiar with the state requirements. The lack of familiarity with state advertising requirements happens a lot with multi-state lenders. They have a good grasp of their home state advertising rules, but this becomes less so as they add more and more states to their geographical footprint. Multi-state residential mortgage loan originators do alright in home state banking examinations in the review of advertisements, but advertising in other states can, and often does, pose a threat to a clean examination audit in this category.
- Newspapers, magazines, or catalog advertisements
- Brochures, direct mail literature, messages on customer statements, or other printed materials, including applications
- Electronic media, including Internet home pages and electronic billboards
- Signs, either interior or exterior, and displays, and billboards
- Radio, television, or public address system broadcasts
- Oral communications between financial institution employees and actual or potential customers, including telephonic and face-to-face solicitations or response to inquiries
- Communications made through Facebook, LinkedIn, Twitter, text messaging, and other social media avenues
1. Every advertisement used by, or published on behalf of an must clearly and conspicuously disclose the following information:
a. The name of the as set forth in the license issued by the banking department.
b. The abbreviation "NMLS ID #" followed immediately by both the unique identifier assigned by the Registry to the and the address for the NMLS Consumer Access website in parenthesis. For example: NMLS ID # 999999 ().
c. If an advertisement contains a rate of interest, a statement that the stated rate may change or not be available at the time of the loan commitment or lock-in.
d. If an advertisement contains specific information about a consumer's existing mortgage loan and such information was not obtained from the consumer, a statement identifying the source of such information (i.e., public court records, credit reporting agency, and so forth).
2. The may not deceptively advertise a mortgage loan, make false or misleading statements or representations, or misrepresent the terms, conditions, or charges incident to obtaining a mortgage loan.
3. An may not use or cause to be published an advertisement that states or implies the following:
a. It is affiliated with, or an agent or division of, a governmental agency, depository institution, or other entity with which no such relationship exists; or
b. A consumer has been or will be "preapproved'' or "pre-approved'' for a mortgage loan, unless the
i. discloses on the face of the advertisement in at least 14-point bold type that "THIS IS NOT A LOAN APPROVAL'' and
ii. clearly and conspicuously discloses the conditions and/or qualifications associated with such preapproval. This provision is intended to supplement the requirements of the Fair Credit Reporting Act (FCRA),[iii] relating to firm offers of credit.
4. The is not permitted to use or cause to be published any advertisement that gives a consumer the false impression that the advertisement is being sent by the consumer's current noteholder or lienholder. If an advertisement contains the name of the consumer's current noteholder or lienholder, it may not be more conspicuous than the name of the RMLO using the advertisement.
5. An RMLO may not deliver or cause to be delivered to a consumer any envelope or other written material that gives the false impression that the mailing or written material is an official communication from a governmental entity, unless required by the United States Postal Service.
6. If an advertisement states or implies that a consumer can reduce the monthly payment by refinancing the current mortgage loan, but as a result of such refinancing, the consumer's total finance charges may be higher over the life of the loan, an RMLO must clearly and conspicuously disclose to the consumer that by refinancing the consumer's existing loan, the consumer's total finance charges may be higher over the life of the loan.
7. Every advertisement used by, or published on behalf of, an RMLO must comply with the disclosure requirements for advertisements contained in the Truth in Lending Act and Regulation Z.[iv]
8. For purposes of advertising, the term "clearly and conspicuously'' means that a required disclosure is reasonably understandable, prominently located, and readily noticeable by a potential borrower of ordinary intelligence.
9. Every RMLO must retain for at least three years after it is last published, delivered, transmitted, or made available, an example of every advertisement used, including but not limited to solicitation letters, commercial scripts, and recordings of all radio and television broadcasts, but excluding copies of Internet web pages.
Note that this state’s statute invokes the application of Regulation Z’s advertising rules as well as the FCRA’s guidelines relating to Firm Offers of Credit. In conducting a thorough review of advertising requirements state by state, it is tempting to see a state’s rules as an overlay to the federal rules. They are not overlays at all, but carefully promulgated guidelines that are enforced meticulously by state banking departments.
Where there is a difference between the state and federal rules, the rule that is more restrictive will prevail. Always go beyond the minimum advertising requirements, as the best protection to the nonbank financial institution and the consumer is based on comprehensive disclosure.
[i] 12 CFR, PART 226, Subpart A, §226.2(a)(1)(2)
[iii] 15 USC § 1681 et seq.
[iv] 12 CFR, Part 226