In the upcoming October issue of HousingWire magazine, our tech guy Rick Grant gets deep into the usefulness of social media in the mortgage space. It's a must read for those who feel they aren't capitalizing on the 101 ways to Facebook your business into success. It's no surprise, considering Forbes reports that 54 percent of small and mid-sized businesses are using Facebook, LinkedIn, Twitter to promote their business. That's double the number in December 2009. Social media just bleeds success, as Forbes is also reporting that Steven Zuckerberg is now worth more than Steve Jobs. As for HousingWire -- guilty as charged. We even kicked around joining up to foursquare. Right now we're content with our kicking Twitter feeds, but don't think that social media is not without pitfalls for mortgage finance companies. But check out a recent warning from Washington advisory fim Patton Boggs: "It is critical that mortgage lending companies, in particular, proceed with caution," according to a weekly alert from the law firm. "Social media is widely considered a form of advertising, triggering various state and federal disclosure requirements." So, twittering away your day could end a mortgage originator in hot water? How so? Reg Z, in implementing the Truth in Lending Act, requires certain disclosures and provides various limitations with respect to lending advertisements. The example Patton Boggs gives is:
If a mortgage advertisement states the amount of any payment, the regulations require that advertisement also disclose in a “clear and conspicuous” manner: (i) the amount of each payment that will apply over the term of the loan, including any balloon payment, (ii) the period of time during which each payment will apply, and (iii) in an advertisement for credit secured by a first lien, the fact that the payments do not include amounts for taxes and insurance premiums, if applicable, and that the actual payment obligation will be greater.
As I mentioned in my column yesterday, as well as the week before, running things through compliance personnel is of utmost importance. Now that Dodd-Frank is coming into effect, mortgage finance needs to give the appearance of hygienic operations and even energetic Facebook poking may go from push to shove. Patton Boggs also warns of state-by-state regulations, but we'll wrap with some more examples…
Other examples of prohibited practices include, among others: (i) making any comparison in an advertisement between actual or hypothetical credit payments or rates and any payment or rate that will be available under the advertised product for a period less than the full term of the loan, unless certain disclosures are provided; (ii) making any statement in an advertisement that the product offered is a "government loan program," "government-supported loan," or is otherwise endorsed or sponsored by any government entity, unless the advertisement is for an FHA loan, VA loan, or similar loan program that is, in fact, endorsed or sponsored by a government entity; or (iii) making any misleading claim in an advertisement that the mortgage product offered will eliminate debt or result in a waiver or forgiveness of a consumer's existing loan terms with, or obligations to, another creditor.
Jacob Gaffney is the editor of HousingWire. Write to him.