2012 Arizona Mortgage Lending Internet Advertising Compliance

Arizona Internet Advertising Compliance
State and Federal Regulations Related
to Electronic Mortgage Advertising
2012

Common Types of Internet Advertising:
Websites and Blogs
Social Media
Email Marketing
Online Classified Advertisements

Arizona Rules and Regulations
A mortgage broker must reasonably supervise the
activities of a loan originator who is licensed pursuant to
article 4 of this chapter and who is employed by the
mortgage broker. (A.R.S. §6-909. Q)
A mortgage banker must reasonably supervise the
activities of a loan originator who is licensed pursuant to
article 4 of this chapter and who is employed by the
mortgage banker. (A.R.S. §6-947. P)

Arizona Rules and Regulations
Mortgage Loan Originator Definition: (A.R.S. §6-
991.12) A person employed by a mortgage broker or
mortgage banker who either takes a residential
mortgage loan application for a mortgage broker or
mortgage banker or offers or negotiates terms of a
mortgage loan for compensation or in the expectation of
compensation.
A person shall not act as a mortgage broker, mortgage
banker or loan originator if the person is not licensed
pursuant to ARS 6-901, 6-941, or 6-991.

Arizona Administrative Code:
Holds out to the public: (A.A.C. R20-4-102) …
advertising or otherwise informing the public that
mortgage banking loans, commercial mortgage loans,
or mortgage loans are made or negotiated at a location.
"Holds out to the public" includes listing a location on
business cards, stationery, brochures, rate lists, or other
promotional items. "Holds out to the public" does not
include a clearly identified home or mobile telephone
number on a business card or stationery.

Directly or indirectly makes, negotiates, or offers to make or negotiate" and
"Directly or indirectly making, negotiating, or offering to make or negotiate,"
as those phrases are used in A.R.S. §§ 6-901, 6-941, or 6-971, mean:
Providing consulting or advisory services in connection with a mortgage
loan transaction, mortgage banking loan transaction, or commercial
mortgage loan transaction;
To an investor, concerning the location or identity of potential borrowers,
regardless of whether the person providing consulting or advisory services
directly contacts any potential borrowers; or
To a borrower, concerning the location or identity of potential investors or
lenders.
Do you ask if your loan officers or other employees are paying for leads?
Do you even know where your employees get their leads?

Mortgage Loan Originator Prohibited Acts
A loan originator acting on the loan originator's own behalf shall not advertise any
solicitation of mortgage business. (A.R.S. § 6-991.02.3)
A loan originator shall not make a false promise or misrepresentation or conceal an
essential or material fact in the course of the mortgage broker or mortgage banker
business. (A.R.S. § 6-991.02.9) … false misleading deceptive
… rates, terms and conditions

Mortgage Loan Originator Prohibited Acts
A loan originator shall not advertise for mortgage business in any manner without all
of the following: (A.R.S. § 6-991.02.14)
(a) The name and license number of the employing mortgage broker,
mortgage banker or consumer lender.
(b) Approval of the employing mortgage broker, mortgage banker or
consumer lender.
(c) The Unique Identifier that the loan originator maintains with the nationwide
mortgage licensing system.
A person engaged in the mortgage business shall not advertise any false,
misleading or deceptive statement or representation with regard to the rates, terms
or conditions for a mortgage loan. (A.R.S. § 6-947.D)

Recordkeeping Requirements (A.A.C. R20-4-917 &
R20-4-1806) In addition to any statutory requirement
regarding records, a record maintained by a mortgage
broker/banker shall include … samples of every piece of
advertising relating to the mortgage broker's/banker’s
business in Arizona.

Arizona’s Fraudulent Practices Act (ARS § 44-1481.)
A person is guilty of a class 3 misdemeanor who:
1. Knowingly and with the intent to sell to the public real or personal
property or services, or to induce the public to acquire an interest
therein, makes and publishes an advertisement, either printed or by
public outcry or proclamation, or otherwise, containing any false,
fraudulent, deceptive or misleading representations in respect to
such property or services, or the manner of its sale or distribution.
2. Publishes, circulates or disseminates any statement or assertion
of fact concerning real estate which is known by him to be untrue,
and which is made or disseminated with the intention of misleading.

Arizona’s Trade and Commerce Laws Pertaining to Loan
Information and Solicitations (ARS 44-1799.51.)
A. A person shall not reference the trade name or trademark of a lender or a trade
name or trademark confusingly similar to that of a lender in a solicitation for the
offering of services or products without the consent of the lender unless the
solicitation clearly and conspicuously states all of the following in close proximity to
and in the same or larger point type as the first and the most prominent use of a
lender's trade name or trademark in the solicitation:
1. The name, address and telephone number of the person making the solicitation.
2. That the person making the solicitation is not affiliated with the lender.
3. That the solicitation is not authorized or sponsored by the lender.
4. That the loan information referenced was not provided by the lender.

B. A person shall not reference a loan number, loan amount or other specific loan
information that is not publicly available in a solicitation for the purchase of services
or products, except that this prohibition does not apply to communications by a
lender or its affiliates with a current customer of the lender or with a person who was
a customer of the lender during the eighteen months immediately preceding the
solicitation.

C. A person shall not reference a loan number, loan amount or other specific loan
information that is publicly available in a solicitation for the purchase of services or
products unless the communication clearly and conspicuously states all of the
following in close proximity to and in the same or larger point type as the first and
the most prominent use of a loan number, loan amount or other specific loan
information that is publicly available in the solicitation:
1. The name, address and telephone number of the person making the solicitation.
2. That the person making the solicitation is not affiliated with the lender.
3. That the solicitation is not authorized or sponsored by the lender.
4. That the loan information referenced was not provided by the lender.

D. Subsection C does not apply to communications by a lender or its affiliates with a
current customer of the lender or with a person who was a customer of the lender
during the eighteen months immediately preceding the solicitation.
E. A person shall not use the name of a lender or a name similar to that of a lender
in a solicitation directed to consumers if that use could cause a reasonable person
to be confused, mistaken or deceived as to either of the following:
1. The lender's sponsorship, affiliation, connection or association with the person
using the name.
2. The lender's approval or endorsement of the person using the name or the
person's services or products.

F. Any reference to an existing lender, a loan number, loan amount or other specific
loan information that appears on the outside of an envelope, that is visible through
the envelope window, or that appears on a postcard in connection with any written
communication that includes or contains a solicitation for goods or services is
prohibited without the consent of the existing lender.
G. It is not a violation of this section for a person to use the trade name of another
lender in an advertisement for services or products to compare the services or
products offered by the other lender.

H. A lender or owner of a trade name or trademark may seek an injunction against a
person who violates this section to stop the unlawful use of the trade name,
trademark or loan information. The person seeking the injunction shall not have to
prove actual damage as a result of the violation. Irreparable harm and interim harm
to the lender or owner shall be presumed. The lender or owner seeking the
injunction may seek to recover actual damages and any profits the defendant has
accrued as a result of the violation. The prevailing party in any action brought
pursuant to this section is entitled to recover costs associated with the action and
reasonable attorney fees from the other party.
I. For the purposes of this section, "lender" means a bank, national bank doing
business in this state, industrial bank, savings and loan association, savings bank,
credit union, finance company, mortgage bank, mortgage broker, loan originator or
holder of the loan or other person who makes loans in this state and any affiliate, or
any third party operating with the consent of the lender.

Role of the Consumer Financial Protection Bureau
• The Dodd-Frank Act establishes an Office of Fair Lending
and Equal Opportunity within the Consumer Financial
Protection Bureau (CFPB) to be responsible for this.
• This Office is intended to:
– Provide oversight and enforcement of federal laws to ensure
fair, equitable, and nondiscriminatory access to credit.
– Coordinate fair lending efforts with other federal and state
regulators.
– Provide annual reports.
• List of CFPB Inherited Regulations
http://www.consumerfinance.gov/regulations

Rob Chrisman's comments are below. http://www.robchrisman.com/
August 3, 2012
Well, this was bound to happen. I was contacted by a non-bank lender,
doing less than $50 million per month, who is about to be audited by
the CFPB. It reminded me of something this commentary has written about
several times: if you think you're not going to be audited by the CFPB,
you're most likely incorrect. Management asked me if I knew of anyone
they could speak with, who has been through this, or is going through a
CFPB audit, on an informal basis about advice. So if that description fits,
and you don't mind sharing information, let me know and I'll put you in
touch. Or, if you'd like me to publish some anonymous comments in the
commentary about what it was like, shoot me an e-mail. (I wish I had the
technological savvy to set up an "Audited by the CFPB" user's group.)

July 31, 2012
Non-bank lenders are often confused as to whether or not they will be subjected to CFPB scrutiny.
They will be, just as several non-banks are being audited. The Consumer Financial Protection Bureau’s
Office of Fair Lending and Equal Opportunity released expectations for non-banks concerning compliance
with fair lending and unfair, deceptive, or abusive acts or practices ("UDAAP") laws. The Bureau intends to
create a level playing field between banks and non-banks, but CFPB representatives have indicated that
they understand that fair lending programs take time to develop and that they will need to help educate
executive and senior management at non-banks concerning the importance of fair lending laws and the risks
of non-compliance. As a result, the CFPB does not expect to find fully developed and implemented fair
lending programs in place at non-banks during the initial examination cycle and recognizes that such
programs will evolve. Nonetheless, non-banks will be expected to quickly develop and maintain fair lending
programs that are comparable to those at banks. Similarly, it is expected that UDAAP programs will evolve
for both banks and non-banks as the CFPB continues to define "abusive" practices through examinations
and enforcement actions. Fair lending risk assessments will continue to be required for banks and are
expected for non-banks. One issue that continues to garner discussion among both banks and non-banks is
the presence of enforcement attorneys in examination meetings throughout the examination process. The
Bureau understands that both banks and non-banks will want to have their attorneys present if
CFPB enforcement attorneys attend compliance examination meetings. The CFPB would not object to
the presence of in-house or outside counsel for financial institutions at these meetings so long as such
attorneys are not acting in a manner that obstructs the examination process reports law firm
BuckleySandler LLP.

• What is fair lending?
• The Dodd-Frank Wall Street Reform and
Consumer Protection Act establishes the
definition of fair lending as:
– “The fair, equitable, and nondiscriminatory
access to credit for consumers.”
• Read the Article “Mortgage Lenders Brace
for Their CFPB Exams”
• http://tbwsdailyshow.com/2012/11/21/cfpb-on-
war-path/

ECOA: Enforcement by CFPB
• There is also evidence that the CFPB will test for
evidence of:
– “disparate impact.”
• Disparate impact refers to when a law that isn’t
discriminatory on its face value has a greater impact on a
minority group than it has on other groups.

Supervision Examination Manual p. 78
ECOA: Examination Procedures

ECOA Enforcement/Violations
• The Consumer Finance Protection Bureau
(CFPB) enforces the Equal Credit Opportunity Act
(ECOA).
• Failure to comply with the Equal Credit Opportunity
Act's Regulation B can subject a financial
institution to civil liability for actual and punitive
damages in individual or class actions.
• Liability for punitive damages can be as much as
$10,000 in individual actions and the lesser of
$500,000 or 1% of the creditor’s net worth in
class actions.

Reg N: Mortgage Acts and Practices - Advertising
• … issued by the Bureau of Consumer Financial Protection
to implement the 2009 Omnibus Appropriations Act, Public
L. 111-8, section 626, 123 Stat. 524 (Mar. 11, 2009), as
amended by the Credit Card Accountability Responsibility
and Disclosure Act of 2009, Public Law 111-24, section
511, 123 Stat. 1734 (May 22, 2009), and as amended by
the Dodd-Frank Wall Street Reform and Consumer
Financial Protection Act of 2010, Public Law 111-203,
section 1097, 124 Stat. 1376 (July 21, 2010).
• This part applies to persons over which the Federal Trade
Commission has jurisdiction under the Federal Trade
Commission Act.
• Refer to Prohibited Representations http://bit.ly/YmPH7k

Reg X: RESPA
• Section 8: Kickbacks, Fee-Splitting, Unearned Fees
– Any person that gives or receives anything of value (payments,
commissions, fees, gifts or special privileges) for the referral of
settlement business is in violation of Section 8 of RESPA.
Payments in excess of the reasonable value of goods provided or
services rendered are considered unearned fees.
For example: Joint Advertising requires the payment based on
prorated use.

Reg X: RESPA
• Examination Procedures:

Reg Z: Truth in Lending - Closed-End Advertising
• Advertising Accurate and Balanced Information
About Rates, Payments and Other Loan
• Annual Percentage Rate
• Triggering Terms Requiring Disclosure
– The amount of the down payment
– The amount of any payment
– The number of payments
– The period of repayment
– The amount of any finance charge

Required Advertising Disclosures
• If any triggering terms are used in an ad, all of these
disclosures must be made:
– Amount or percentage of down payment
– Terms of repayment
– APR (spelled out in full); if the note rate may
increase (e.g., ARMs), that fact must also be
disclosed
• If an ad discloses on the APR, the additional
disclosures are not required
• TILA Disclosures must be “clear and conspicuous”

Seven Prohibited Deceptive or Misleading Acts or Practices in Advertising

Unfair, Deceptive, or Abusive Acts or Practices
CFPB has supervisory authority for detecting and assessing risks to consumers and to
markets for consumer financial products and services.
a. Examination procedures to identify the risks of harm to consumers
b. These examination procedures provide general guidance on:
(1) The principles of unfairness, deception, and abuse in the context of offering and providing
consumer financial products and services;
(2) Assessing the risk that an institution's practices may be unfair, deceptive, or abusive;
(3) Identifying unfair, deceptive or abusive acts or practices (including by providing examples
of potentially unfair or deceptive acts and practices); and
(4) Understanding the interplay between unfair, deceptive, or abusive acts or practices and
other consumer protection statutes.

Unfair, Deceptive, or Abusive Acts or Practices
See UDAAP Section of “Preparing for a CFPB Examination”
See Examination Manual p. 57

Fair Housing Act: Purpose
• The federal Fair Housing Act prohibits
discrimination:
– In advertising, real estate brokerage, lending,
or any services associated with residential
transactions.
– Against individuals who associate with persons
in these protected classes.
– Against U.S. citizens and non-citizens.
42 U.S.C. 3601-3619

Federal Fair Housing Legislation
A. Fair and equitable treatment in housing and real estate
transactions is a right by law.
The Fair Housing Act was passed on April 11, 1969
It shall be unlawful, because of race, color, religion, sex,
handicap, familial status, or national origin, to restrict or attempt
to restrict the choices of a person by word or conduct in
connection with seeking, negotiating for, buying or renting a
dwelling so as to perpetuate, or tend to perpetuate, segregated
housing patterns, or to discourage or obstruct choices in a
community, neighborhood or development. (24 CFR Part 14,
Section 100.70(a)).

Federal Fair Housing Act or Title VIII
of the Civil Rights Act of 1968
A. Prohibits discrimination based on:
1. Race
2. Color
3. Religion
4. Sex
5. National origin
6. Disability
7. Familial status
B. Covers all housing transactions and services including
advertising, rentals, sales, lending, and insurance, as well as
harassment.
C. Prohibits using discriminatory advertising or any other notice that
indicates a limitation or preference or intent to make any
limitation, preference, or discrimination.

Fair Housing in Advertising
A. Real estate advertising should take steps to
ensure that advertising that they publish
does not convey a message of preference
for or against any protected group, whether
through words, pictures or other images.
Fair housing law prohibits not only real estate advertising
that is explicitly discriminatory, i.e. “for whites only,” but
also advertising which uses indirect means, such as
words, cues, or photos to convey a discriminatory
message (i.e. advertising which uses only white models).

B. Use of Words, Phrases or Symbols
1.The use of words, phrases, and symbols to convey
overt or implicit discriminatory preferences or
limitations is prohibited.
As a real estate advertiser it is important that one understand that the law
prohibits not only advertisements that express a preference against certain
homeseekers, i.e. blacks or children, but also those that express a preference
for a particular type of person, i.e. “Jewish tenants sought” or “ideal for female
tenant”. Both types of advertisements may indicate a “preference, limitation or
discrimination” based on a protected class.

a. words descriptive of dwelling, landlords and tenants - White
private home, Colored home, Jewish home, Hispanic
residence, adult building.
b. words indicative of a protected class
(1) Race – Black, Caucasian, Asian, American Indian.
(2) Color – White, Black, Colored
(3) Religion – Protestant, Christian, Catholic, Jew.
(4) National origin – Mexican American, Puerto Rican,
Philippine, Polish, Hungarian, Irish, Italian, Chicano, African,
Hispanic, Chinese, Indian, Latino.

words indicative of a protected class
(5) Sex – the exclusive use of words in advertisements
stating or tending to imply that the housing being advertised
is available to persons of only one sex and not the other,
except where the sharing of living areas is involved.
(6) Disabled – physically impaired, blind, deaf, mentally ill,
physically fit. Nothing in this part restricts the inclusion of
information about the availability of accessible housing in
advertising of dwellings.
(7) Familial status – adults, children, singles, mature
persons. Nothing in this part restricts advertisements of
dwellings which are intended and operated for occupancy
by older persons and which constitute housing for older
persons.

c. catchwords - words and phrases used in a discriminatory
context should be avoided. (e.g. restricted, exclusive,
private, integrated)
Catchwords convey preferences for one group over another
or send signals about a community's makeup.
d. symbols and logotypes which imply a protected class

e. colloquialisms - words or phrases used regionally or locally
that seeks to imitate informal speech which imply or suggest
a protected class
Colloquialisms or colloquial language is considered to be
characteristic of or only appropriate for casual, ordinary,
familiar, or informal conversation rather than formal speech
or writing.
Slang or Dialect
http://www.facebook.com/note.php?note_id=117545201594184

f. directions to real estate for sale or rent that imply discriminatory
preference, limitation or exclusion.
For example, references to real estate location made in terms of racial
or national origin significant landmarks, such as an existing black
development (signal to blacks) or an existing development known for its
exclusion of minorities (signal to whites). Specific directions which make
reference to a racial or national origin significant area may indicate a
preference. References to a synagogue, congregation or parish may
also indicate a religious preference.
g. area or location description - using the names of facilities which cater to
a particular racial, national origin or religious group, such as country club
or private school designations, or names of facilities which are used
exclusively by one sex may indicate a preference.

Appendix I: 1995 HUD Memorandum, Guidance Regarding
Advertisements Under §804(c) of the Fair Housing Act

Human Model Advertising
1. Real estate advertising including photos or drawings may
not be used to indicate exclusiveness.
2. Should be clearly definable as reasonably representing
majority and minority groups in the metropolitan area, both
sexes, and when appropriate, families with children.
3. Should portray persons in equal social settings and indicate
to the general public that the housing is open to all without
regard to race, color, religion, sex, handicap (disability)
familial status or national origin, and is not for the exclusive
use of one such group.

Equal Housing Opportunity Symbols
1. All advertising for the sale, rental, or financing of housing
should contain an equal housing opportunity logo, statement
or slogan.
2. Logo or statement should be a part of each advertisement
and should be placed in visible location and be a
comparable size of other symbols or text used in the
advertisement.
3. Applicable to advertisement for sale, rental and financing of
housing.

Print Media Publishers Are Liable for Discriminatory Advertising
A. United States v. Hunter, 459 F.2d 205 (4th Cir. 1972) cert denied, 409
U.S. 934 (1972):
1. Court ruled that congress intended for the Fair Housing Act to apply to
publishers for placing discriminatory advertisements, as the widespread
appearance of discriminatory advertisements may have a harmful effect
on the general aims of the Act.
B. Ragin v. The New York Times Co., 923 F.2d 995 (2d Cir.), cert. denied,
502 U.S. 821 (1991):
1. The New York Times, a publisher, was found in violation of the Fair
Housing Act for the longstanding practice of allowing the publication of
advertisements using "human models" that did not reasonably represent
the percentage of blacks and other minorities in the New York City
metropolitan area. The ruling showed that a plaintiff alleging
discrimination need not establish that the defendant intended to express
a racial preference in the ad.

Fair Housing Application to Internet Advertising
D. Position held by HUD
1. 2006 HUD Memorandum, Fair
Housing Act Application to Internet
Advertising (seeAppendix II)
a. "Just as the Department has
found newspapers in violation
of the Fair Housing Act for
publishing discriminatory
classifieds, the Department
has concluded that it is illegal
for Web sites to publish
discriminatory
advertisements."

E. Online Housing Providers Challenge to the Fair Housing Act
1. Online housing providers claim that they are exempt from liability
under the Fair Housing Act.
F. Communications Decency Act (CDA), 47 U.S.C § 230
1. Intended to protect families from online pornography and other forms
of indecency.
2. States that the operators of Internet services are not to be construed
as publishers, and thus are not legally liable for the words of third
parties who use their services.
3. The CDA makes exceptions to this rule as it relates to federal
criminal statutes and intellectual property law, but does not make
explicit exceptions for the Fair Housing Act.

G. Court Decisions Regarding Online Housing
Providers
1. Two recent major court decisions have ruled in favor of
online housing providers.
2. Chicago Lawyers' Committee for Civil Rights Under Law
v. Craigslist, 519 F.3d 666 (7th
Cir. 2008)
a. The court ruled that the CDA protects online information systems
from being treated as the publisher or speaker of any information
provided by a third party, including discriminatory housing
advertisements.

G. Court Decisions Regarding Online Housing
Providers
3. Fair Housing Council v. Roommates.com, 521 F.3d 1157
(9th Cir. 2008)
a. The court ruled that an online housing provider could be held
liable under the Fair Housing Act for drafting and publishing
questionnaires that required members to answer questions that
potentially enabled other members to discriminate against them.
b. However, the court also ruled that a web service operator is
provided immunity as a publisher within the meaning of the CDA,
when it publishes the comments as written by a third party.

Website or Blog Disclaimer
Fair Housing Notice
All websites should print a notice that they
will not knowingly accept advertising that
violates fair housing laws. This notice may
also include statements regarding the
coverage of any local or state fair housing
law as well as the federal fair housing laws.
Ex. http://www.craigslist.org/about/FHA

Enforcement
• The United States Department of Housing and
Urban Development (HUD) is the federal agency
responsible for administering and enforcing the Fair
Housing Act.
• The Office of Fair Housing and Equal
Opportunity (FHEO) handles enforcement
activities and establishes policies for compliance.
• According to the Office of Fair Housing and
Equal Opportunity:
– “Equal access to rental housing and home ownership
opportunities is the cornerstone of this nation’s federal
housing policy.”
8 HR Comprehensive Compliance in Action March 2012

Penalties for Violations
• Violation of fair housing laws may result in:
– Suspension or revocation of a license.
– Punitive damages.
– Compensatory damages.
– Injunctions ordered by a court of law.
8 HR Comprehensive Compliance in Action March 2012

Use of HUD/FHA Logo, Name
and Acronym in Advertising
• Mortgagee Letter 2011-17
• April 15, 2011
This Mortgagee Letter communicates requirements to mortgagees regarding
the use of the official logos, names and acronyms of the U.S. Department
ofHousing and Urban Development (HUD or the Department) and the
Federal Housing Administration (FHA) within devices used to advertise or
promote the business products or operations of FHA-approved
mortgagees.
… a “Device” constitutes a channel or instrument for soliciting, promoting or
advertising FHA products or programs.

Under §§ 202 and 536 of the National Housing Act (NHA),
HUD may impose sanctions, including civil money penalties,
for misuse of the terms
• “Federal Housing Administration,”
• “Department of Housing and Urban Development,”
• “Government National Mortgage Association,”
• “Ginnie Mae,”
• the acronyms “HUD,” “FHA,” or “GNMA,”
• or any official seal or logo of the Department of Housing and
Urban Development.

Use of FHA Logos
FHA-approved mortgagees may display the official FHA Approved Lending
Institution logos on a Device for the purpose of describing … the types of loan
products offered by the mortgagee.
… must be displayed in a discreet manner.
… must, in each instance, be accompanied by a conspicuous disclaimer that
clearly informs the public that the mortgagee authoring the Device is not acting on
behalf of or at the direction of HUD/FHA or the Federal government.
The disclaimer should be prominently displayed in a location proximate to where the
FHA Approved Lending Institution logo(s) is displayed.

Official FHA Approved Lending
Institution Logos

Use of FHA Logos
FHA-approved mortgagees may display the official FHA Approved Lending
Institution logos on a Device for the purpose of describing … the types of loan
products offered by the mortgagee.
… must be displayed in a discreet manner.
… must, in each instance, be accompanied by a conspicuous disclaimer that
clearly informs the public that the mortgagee authoring the Device is not acting on
behalf of or at the direction of HUD/FHA or the Federal government.
The disclaimer should be prominently displayed in a location proximate to where
the FHA Approved Lending Institution logo(s) is displayed.

Use of FHA Logos
The Device, when taken as a whole, shall emphasize the HUD-registered
business name, alias or d/b/a of the mortgagee and not the Federal government.
… the Device shall be written, formatted and structured in a manner which clearly
identifies the mortgagee as the sole author and originator of the Device.
Specifically, the Device should reflect
the mortgagee’s name,
location
and appropriate contact information.

Use of FHA Logos
… strictly prohibited from displaying the official FHA Approved
Lending Institution logo(s) in a location or manner within a
Device that creates the false impression that the Device is an
official government form, notice or document or that
otherwise conveys the false impression that the
Device is authored, approved, or endorsed by the
Department or FHA.
Furthermore, alteration or modification of the FHA Approved
Lending Institution logo(s) is strictly prohibited.
** If you’re not FHA approved, you can’t use any of the logos **

Use of FHA Logos
Moreover, use of the FHA logo is strictly prohibited. No person,
party, company, or firm, including FHA-approved mortgagees,
may use the FHA logo.
= BAD!

Use of HUD Seal
FHA-approved mortgagees, non FHA-approved mortgagees
and Third Party Originators are not permitted to display the
official HUD seal or any other insignia that imitates an official
Federal seal on any Device.
= BAD!

Use of HUD/FHA Names and
Acronyms
FHA-approved mortgagees may not purport or imply that as a result of their
approval to participate in FHA programs that their business products or
services are coming directly from HUD or FHA.
The use of the words “federal,” “government,” “national,” “U.S.
Department of Housing and Urban Development,” “Federal Housing
Administration,” and/or the letters “HUD” or “FHA”
… in a manner that falsely represents that the mortgagee’s business
services or products originate from HUD, FHA, the Government of the
United States, or any Federal, State or local government agency is strictly
prohibited.

Must retain copies of any Device related to FHA programs for a two years.
Failure to follow HUD/FHA requirements as outlined in this Mortgagee
Letter may result in sanctions, including civil money penalties or
administrative action against any person, party, company, firm, partnership
or business, including non FHA-approved institutions and individuals.

FTC Policy Statement on Deception
– An ad is deceptive if it contains a statement – or omits
information – that
• is likely to mislead consumers acting reasonably under the
circumstances or
• is material to a consumer’s decision …
– Practices related to mortgage ads that have been found
to be misleading or deceptive include:
• False representations or omissions
• Misleading price claims
• Use of bait and switch techniques
• Failure to perform promised services

FTC Policy Statement on Unfairness
• An ad is unfair if:
– It causes, or is likely to cause, substantial consumer
injury which a consumer could not possibly avoid; and,
– It is not outweighed by the benefit to consumers.
• For an injury to be considered unfair, it must be
substantial and in most cases involves monetary
harm.
• Also, could the consumer have reasonably avoided
injury?
• Ex. predatory lending schemes

Questions to Consider
• Does your advertising make your customers satisfied
that they do business with you?
• Are you avoiding impossible promises and
guarantees?
• Are your advertised programs readily available?
• Do you mean to sell what you advertise?
• Do your ads avoid misleading inferences?
• Do your advertised terms agree with the facts?
• Is your advertising easy to understand without asterisks
and fine print?
• Do you believe your own comparatives?

Clear and Conspicuous
• FTC Dot Com Disclosure provides guidance
on making disclosures clear and
conspicuous.
• placement and proximity are critical.
– Place disclosures near, and when possible, on
the same screen as triggering claim.
– Use text or visual cues to encourage consumers
to scroll down when it is necessary to view a
disclosure.

– If using hyperlinks to lead to disclosures, make
the link obvious, label the hyperlink
appropriately to convey the importance of the
information it leads to, and take consumers
directly to the disclosure.
– Note: burying disclosures in a link probably will
not meet the letter of the law.

– Prominently display disclosures so they are
noticeable to consumers, and evaluate the size,
color and graphic treatment of the disclosure in
relation to other parts of the page.
– Review the entire ad to ensure that other
elements – text, graphics, hyperlinks or sound –
do not distract consumers’ attention from the
disclosure.
– Repeat disclosures – as needed – on lengthy
websites and in connection with repeated claims.

– Repeat disclosures – as needed – on lengthy
websites and in connection with repeated claims.
– Display visual disclosures for a duration
sufficient for consumers to notice, read and
understand them.
– Use clear language and syntax so that
consumers understand the disclosures.

Things to Consider
– Email correspondence
– Websites
» Blog correspondence (posts and comments)
» Links to 3rd Party Sites
– Real Estate Advice Online Services
» Zillow Advice, Trulia Advice. Yahoo! Answers,
LinkedIn Answers
– Interaction in online communities and social media
platforms
» Facebook
» Twitter

2012 Arizona Mortgage Lending Internet Advertising Compliance

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2012 Arizona Mortgage Lending Internet Advertising Compliance