MLO Mentor is an ongoing series covering compliance best practices for mortgage loan originators (MLOs). This article continues our discussion in Part I of the Mortgage Assistance Relief Services (MARS) rule and its associated disclosure requirements. Enroll in firsttuesday’s 8-Hour NMLS CE to renew your California MLO license and learn more about fraud and abuse prevention in your practice.

 Disclosures required for general commercial communication

A general commercial communication is a commercial communication that is:

  • not geared towards a specific consumer; and
  • takes place before a consumer authorizes a mortgage assistance relief service provider to investigate mortgage assistance relief on behalf of the consumer or otherwise consents to use the mortgage assistance relief service. [12 CFR §1015.2]

Regulation O, which enacts the MARS rule, establishes disclosure requirements specific to general commercial communication. The following statements must be placed on all general commercial communication in a clear and prominent manner:

  1. “(Name of company) is not associated with the government, and our service is not approved by the government or your lender.”
  2. When a mortgage assistance relief service provider has represented in any way that consumers are guaranteed a modification, forbearance, extension or waiver of the obligations under a dwelling loan: “Even if you accept this offer and use our service, your lender may not agree to change your loan.”
  3. “IMPORTANT NOTICE” at the beginning of disclosures, which must be listed together in text communications in bold face font at least two point-type larger than the font size of the required disclosures.
  4. “Before using this service, consider the following information,” at the beginning of audible or spoken communications. [12 CFR §1015.4(a)]

Disclosures required for consumer-specific commercial communication

If commercial communication is geared towards a specific consumer and takes place before a consumer authorizes a provider to investigate offers of mortgage assistance relief on behalf of the consumer or otherwise consents to use the mortgage assistance relief service, the communication is considered consumer-specific commercial communication. [12 CFR §1015.2]

Regulation O mandates certain disclosures must be used in consumer-specific commercial communication. The following statements must be placed on all consumer-specific commercial communication in a clear and prominent manner:

  1. “You may stop doing business with us at any time. You may accept or reject the offer of mortgage assistance we obtain from your lender [or servicer]. If you reject the offer, you do not have to pay us. If you accept the offer, you will have to pay us (insert amount or method for calculating the amount) for our services.”
  2. “(Name of Company) is not associated with the government, and our service is not approved by the government or your lender.”
  3. When a mortgage assistance relief service provider has represented in any way that consumers are guaranteed a modification, forbearance, extension or waiver of the obligations under a dwelling loan: “Even if you accept this offer and use our service, your lender may not agree to change your loan.”
  4. “IMPORTANT NOTICE” at the beginning of disclosures, which must be listed together in text communications in bold face font at least two point-type larger than the font size of the required disclosures.
  5. “Before using this service, consider the following information,” at the beginning of audible or spoken communications, such as telephone communications. [12 CFR §1015.4(b)]

The amount or method for calculating the amount a consumer will have to pay if they accept the offer must include the total amount the consumer must pay to purchase, receive and use all of the mortgage assistance relief services that are subject of the sales offer, including items such as fees and charges.

Whether general or consumer-specific, any communication through which a mortgage assistance relief service provider recommends the consumer might benefit from temporarily or permanently discontinuing payments, in whole or in part, on a dwelling loan must include, clearly and prominently, the disclosure, “If you stop paying your mortgage, you could lose your home and damage your credit rating.” [12 CFR §1015.4(c)]

How are disclosures formatted?

Disclosures must always be communicated in a comprehensible language and syntax and must not contradict or be inconsistent with the disclosure’s intent. Disclosures are required to meet a clear and prominent standard under the regulations. Regulation O defines four general categories of communication and describes how disclosures in those categories must be formatted. [12 CFR §1015.2(5)]

Textual communication

Any communication in printed or written form is considered textual communication. Examples of textual communications are letters, documents and web pages. To meet the qualifications of a “clear and prominent” disclosure for a textual communication, the disclosures must be:

  • easily readable;
  • in a high degree of contrast from the immediate background on which it appears;
  • in the same languages that are extensively used in the communication;
  • distinct from other text, such as inside a border;
  • in a distinct type style, such as bold;
  • parallel to the base of the commercial communication; and
  • displayed with each letter at least the larger of 12-point type or one-half the size of the largest letter or numeral used in the name of the advertised web site or telephone number provided for consumers to acquire more information on any mortgage assistance relief service. [12 CFR §1015.2(1)]

Oral and audible communication

Oral and audible communication includes any communications such as radio or streaming audio. Applicable communications must contain disclosures delivered in a slow, deliberate manner in a reasonably understandable volume and pitch. If the commercial communication is program-length, it must contain disclosures at the beginning, middle and end. [12 CFR §1015.2(2)]

Video communication

Video communication includes mediums like television and streaming video. Compliant communications will audibly state and display disclosures simultaneously. The audible form of the disclosure must be delivered in a slow, deliberate manner in a reasonably understandable volume and pitch. Visual disclosures must:

  • be at least four percent of the vertical picture or screen height;
  • remain on display for the entire duration of the audio disclosure;
  • meet all requirements for textual communication as stated previously; and
  • if program-length, contain disclosures at the beginning, middle and end. [12 CFR §1015.2(3)]

Interactive media communication

Interactive media communication includes mediums like the internet, online services and software. Adherent interactive media communication disclosures will:

  • meet the requirements for textual communication, oral and audible communication and video communication, if applicable;
  • be stated on the page consumers may take any action to incur any fiscal obligation or on the page immediately prior;
  • be obviously displayed to consumers without requiring them to scroll down the webpage;
  • appear in type at least the same size as the largest character of the advertisement; and
  • if program-length, contain disclosures at the beginning, middle and end. [12 CFR §1015.2(4)]

Keep these disclosure requirements in mind when communicating with clients to stay in compliance with Regulation O and the MARS rule. Sign up for the firsttuesday Newsletter to receive next week’s MLO Mentor in your inbox.