Top Regulatory Pitfalls in Mortgage Video Advertising

Mortgage video advertising is an innovative and effective way to reach potential borrowers, but it’s also a minefield of regulatory pitfalls. Non-compliance in mortgage advertising can result in hefty fines, reputational damage, and even loss of licensure. Understanding the rules and adhering to them is crucial for professionals in the mortgage lending industry.

As game-changing as video content can be, it doesn’t take much to fly off the regulatory rails if your advertising campaigns don’t take compliance into account. Below, we’ll explore 10 common regulatory mistakes in mortgage video advertising, providing examples of related compliance issues and actionable tips to stay on the right side of the law.

1. Misleading Claims

One of the most common red flags in mortgage video advertising is making misleading or exaggerated claims. The Federal Trade Commission (FTC) and Consumer Financial Protection Bureau (CFPB) have strict rules to prevent deceptive practices.

Example: A video ad claims, “Get a 2.5% interest rate now!” without mentioning that this rate is only available for specific loan types or credit profiles.

• Actionable Tip: Always include clear and prominent disclosures about terms, conditions, and eligibility. If the rate is not universally available, this must be explicitly stated in the video.

2. Omitting Required Disclosures

Disclosures are a cornerstone of compliant advertising. The Truth in Lending Act (TILA) requires lenders to disclose terms like APR, loan amounts, and repayment terms.

Example: A lender’s video highlights “no closing costs,” but fails to disclose that these costs are rolled into the loan amount.

• Actionable Tip: Ensure that all mandatory disclosures are displayed prominently, even in short-form videos like TikToks or Instagram Reels. If the platform limits text space, provide a link to the full disclosure.

3. Non-Compliant Use of Social Media Platforms

Platforms like TikTok, YouTube, and Instagram offer vast marketing potential but come with unique compliance challenges. Social media often favors short, engaging content, which can lead to oversimplifications – whether intended or unintended – that violate regulations.

Example: A loan officer posts a TikTok with a skit about “easy approval” without explaining any details regarding the underwriting process or credit requirements.

• Actionable Tip: Follow guidelines like those outlined in our TikTok Compliance Guide. Avoid oversimplifications and always provide a balanced representation of loan terms.

4. Failure to Verify Licensing

Under the Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act), all loan officers must prominently display their NMLS numbers in advertisements, including video ads.

Example: A video ad features a loan officer discussing loan options but does not display their NMLS number at any point during the video.

• Actionable Tip: Include the NMLS number in both the video and accompanying text descriptions to ensure regulatory approval. Use captions or overlays if needed.

5. Exaggerating Benefits

Mortgage video ads must never overstate or artificially inflate the benefits of a product or service without clear context.

Example: A lending video pointed towards potential borrowers claims, “Refinance today and save thousands!” without specifying that savings depend on several factors like loan term, credit score, and existing rates.

• Actionable Tip: Avoid absolute terms like “always” or “guaranteed.” Clearly communicate that results may vary and depend on individual circumstances.

6. Non-Compliance with Fair Lending Laws

The Equal Credit Opportunity Act (ECOA) and Fair Housing Act (FHA) prohibit discriminatory practices in advertising. Video content must not suggest or imply preferential treatment based on race, religion, national origin, gender, or other protected classes.

Example: A particular lender’s videos routinely feature actors from a specific demographic only, inadvertently implying that the lender prefers to serve that group and none other.

• Actionable Tip: Use diverse imagery and inclusive language in all video content to reflect fair lending practices.

7. Improper Endorsements or Testimonials

Endorsements and testimonials can be powerful but must comply with FTC guidelines. Endorsers are required by law to disclose any material connections to the lender.

Example: A video features a happy customer claiming, “I got my dream home thanks to XYZ Mortgage,” without disclosing that they were compensated for the endorsement.

• Actionable Tip: Clearly state whether the testimonial is sponsored and ensure that claims are truthful and substantiated.

8. Inadequate Record-Keeping

Regulators often require lenders to retain copies of their advertisements in the event of a compliance audit. Failing to do so can result in penalties.

Example: A lender creates a series of video ads but does not archive them, making it impossible to demonstrate compliance during a future audit.

• Actionable Tip: Maintain a detailed record of all advertisements, including video content, scripts, and disclosures, for the required retention period.

9. Ignoring Platform-Specific Guidelines

Social media is not a one-size-fits-all landscape and each digital platform has its own advertising policies. Failing to adhere to these guidelines can lead to ad removal and compliance risks.

Example: A YouTube ad includes prohibited phrases like “guaranteed approval” or fails to disclose the advertiser’s identity.

• Actionable Tip: Familiarize yourself with all policies specific to the platform that your advertising team utilizes. What may be allowable on TikTok may not be allowable on Instagram, or vice versa.

10. Neglecting Accessibility Standards

Mortgage video ads must be accessible to all potential viewers, including those with disabilities. Non-compliance with the Americans with Disabilities Act (ADA) can lead to legal issues.

Example: A lender’s video ad lacks captions or a transcript, making it inaccessible to hearing-impaired viewers.

• Actionable Tip: Be sure to allow captioning while readying videos for publication, ensuring the video complies with accessibility standards.

Final Thoughts

Mortgage video advertising is a powerful tool for reaching potential borrowers, but it comes with significant compliance responsibilities. By avoiding the above common pitfalls and staying informed about ever-changing regulatory requirements, mortgage professionals can learn how to create compelling and compliant video content.

When in doubt, consult your compliance team or legal experts to review your video advertising strategies. Staying proactive when it comes to regulatory questions can save your organization from costly mistakes down the road and build trust with your audience.