(WPRI) -- The Federal Trade Commission has sent warning letters to a dozen mortgage companies, demanding that they stop misleading consumers with false mortgage advertisements.
Formal investigations have also begun on six mortgage companies the FTC believes may have committed more serious violations of the law. Thursday's actions stem from a random sweep of 800 selected mortgage ads nationwide.
Ever since the housing crisis, millions of homeowners have been in trouble, many losing their homes. In 2011, a law was passed that prohibits misleading claims concerning interest rates, fees, and costs associated with home loans. But as the FTC and the Consumer Financial Protection Bureau uncovered, dozens of mortgage companies were allegedly misleading consumers.
In a statement, the director of the CFPB says that "baiting consumers with false ads to buy into mortgage products would be illegal."
The sweep identified a number of problems, including advertisements that may have mislead homeowners into believing they were dealing with the government. In some cases, ads for mortgage products contained official-looking seals or logos that could be interpreted by customers that they're working with a government affiliation when in fact, they weren't.
Other problems that were uncovered included possible misrepresentations about the amount of cash or credit available to a consumer, potentially inaccurate information about interest rates, and possible misleading statements concerning the costs of reverse mortgages.
The investigation generally focused on mortgage advertisements, particularly ads that targeted older Americans and veterans. The FTC also looked at ads by home builders, realtors, and is now issuing its own warning letters to about a dozen companies that may have violated the law.
The FTC is not releasing the names of the mortgage lenders or brokers involved since it's a preliminary investigation.
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