“How the Mortgage Acts & Practices” Rules Affect Real Estate Agents & Builders

by 16 May 2012

Part 2:  Commercial Communications 

(TheNicheReport) -- In the very first article regarding the Mortgage Acts & Practices rules, I mentioned that this new advertising rule now applies to everyone involved in selling and marketing one- to four-family, owner-occupied homes.  In addition to Realtors® and mortgage companies, it also includes ad agencies, lead-generation companies and telemarketers. 

The Mortgage Acts & Practices rules have been in effect since August 19, 2011—so it’s been around for a while, but not many people know about it…YET!

A large part of the rule explains “definitions” and what they mean.  And the biggie here is the Fed’s definition of “commercial communications”— or the various ways real estate agents and loan officers communicate with potential home buyers. 

Why would you care?  Because the rule states that if you do place an ad that includes mortgage terms, you must keep a written or electronic version of it for 24 months, in case you are ever audited. 

Here’s what is meant by the term “Commercial Communications”: 

  • Any written or oral statement
  • Illustrations such as charts and graphs
  • English or any other language
  • Labels
  • Packages
  • Package inserts
  • Radio
  • Television
  • Cable TV
  • Brochures
  • Newspapers
  • Magazines
  • Pamphlets
  • Leaflets
  • Circulars
  • Mailers
  • Book inserts
  • Free-standing inserts
  • Letters
  • Catalogues
  • Billboards
  • Posters
  • Public transit cards
  • Point-of-purchase displays
  • Film
  • PowerPoint slides
  • Audio transmitted over the telephone
  • Telemarketing scripts
  • On-hold scripts
  • Upsell scripts
  • Training materials provided to telemarketing firms
  • Infomercials
  • Internet
  • Cellular phones/networks
  • Web pages
  • Email
  • Direct mail
  • In-person sales presentation
  • …anything else considered “commercial communication”

To further clarify record keeping,

  • You must keep copies of all advertising if “materially different.”
    • If the same/similar ad runs in different areas, only one copy is required, but also a list of places where ad placed
    • Description of mortgage products offered to consumers
      • Including terms, conditions and any “unique
        names” given to the mortgage loan
      • Details of affiliated products, i.e., life/disability insurance
        • If a home warranty is REQUIRED as part of the home purchase, it can be interpreted that this may also apply.  

Just a heads up—the two federal agencies assigned the task of enforcing these rules are the Consumer Finance Protection Bureau and Federal Trade Commission.

Here’s the info if you’d like to read more about it (or you need help falling asleep): Federal Register, FTC 16 CRF Part 321

Next month we will outline the 19 “Prohibited Practices.” 

Correction to the February issue article called Advertising Rules (Reg Z) for Mortgage for Realtors/Builders Part 1: the disclosure rules apply if real estate agent co-advertises with a lender.  However, check with your state’s regulators because some states require Reg Z disclosure—even if you are not advertising in conjunction with a mortgage company. The Mortgage Acts & Practice rules in this article covers unfair and deceptive practices and plugs the loop holes that are not covered by Reg Z.


Written and contributed by Karen Deis. President of Foundation Marketing, Inc. which specializes in training real estate agents and loan originators on consumer direct-marketing strategies. You may email Karen with comments or questions to this column at karen@karendeis.com


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