State and federal marketing guidelines

Mortgage advertising is regulated by both state and federal mortgage law. This material provides CalBRE licensees conducting business as a consumer mortgage loan originator (MLO) or business mortgage practice a complete review and application of federal and state mortgage advertising rules.

State laws and regulations regarding mortgage advertising apply to both consumer and business mortgages.

Federal mortgage advertising rules are concerned only with consumer mortgages.

Federal standards of conduct governing mortgage advertisements are established by the Mortgage Acts and Practices — Advertising rule, known as Regulation N. Regulation N was established in 2009 to protect borrowers from deceptive claims in consumer mortgage advertisements. [12 Code of Federal Regulation §§1014 et seq.]

The Federal Trade Commission (FTC) and Consumer Financial Protection Bureau (CFPB) share responsibility for enforcing Regulation N and reviewing mortgage advertisements for violations.

Additionally, the federal Truth-in-Lending Act (TILA) and its related Regulation Z also impose advertising restrictions on consumer mortgages. [12 CFR §1026.24]

License identification disclosure

California Bureau of Real Estate (CalBRE) licensees need to disclose on all marketing materials advertising consumer and business mortgages:

  • whether they are a broker or salesperson;
  • their CalBRE license number; and
  • when advertising a consumer mortgage, their Nationwide Mortgage Licensing System (NMLS) identification number. [Calif. Business and Professions Code §10140.6(b)]

The license identification information provided may be no smaller than the smallest typeface on the marketing and solicitation materials in the advertisement. [CalBRE Regs. §2773(a)(4)]

Mortgage advertisement materials subject to the CalBRE license and NMLS identification disclosure include:

  • printed advertisements;
  • radio and television advertisements; and
  • electronic advertisements, including websites and emails. [Bus & P C §10235.5, 10236.4]

Also, advertisements of mortgage products intended to solicit borrowers need to:

  • identify the licensing authority, using “California Bureau of Real Estate” or “CA Bur of Real Estate”; and
  • include the employing broker’s CalBRE license number and NMLS identification number. [CalBRE Regs. §2773, 2847.3]

An example of proper license identification, when the advertisement of a consumer mortgage product is involved, is:

Jane Smith

Real Estate Broker, California Bureau of Real Estate

License #00000000

NMLS ID #0000

First-point-of-contact information rules

Materials used to solicit or create a client relationship with prospective mortgage borrowers are known as solicitation materials, or first-point-of-contact materials.

These advertising materials for marketing your mortgage practice include:

  • business cards;
  • stationery;
  • emails;
  • websites controlled by the licensee; and
  • [Bus & P C §10140.6(b)(2); CalBRE Regs. §2773(a)]

First-point-of-contact solicitation materials need to include the CalBRE license and, if applicable, the NMLS IDs for each licensee named.

First-point-of-contact materials do not need to:

  • identify the CalBRE as the licensing authority; or
  • provide the CalBRE number of the employing broker, even if the employing broker’s logo appears on the material. [CalBRE Regs. §2773(a); see CalBRE Form RE 858]

Prohibition of misleading terms

Mortgage advertisements a licensee generates may not include false or misleading terms or representations which mislead a borrower into believing the mortgage offered is something it is not. [Bus & P C §10235]

All interest rates, fees, costs, taxes, insurance, prepayment penalties and other special aspects of a mortgage presented in a mortgage advertisement need to be the truth. [CalBRE Regs. §2848; 12 CFR §1014.3]

The prohibition against using misleading terms and the rules for proper use of MLO terms apply to all mortgage advertisements, including:

  • labels, packages and package inserts;
  • radio, television, cable television, films and infomercials;
  • newspapers, magazines and catalogues;
  • brochures, pamphlets and leaflets;
  • circulars, mailers and letters;
  • book inserts, free standing inserts and point of purchase displays;
  • posters, charts, billboards, public transit cards and slides;
  • audio programs transmitted over a telephone system;
  • telemarketing scripts, on-hold scripts and upsell scripts;
  • training materials provided to telemarketing firms; and
  • the internet and mobile networks. [CalBRE Regs. §2848; 12 CFR §1014.2]

CalBRE, the FTC and the CFPB each have separate authority to investigate and request verification of representations made in mortgage advertisements. [15 United States Code §1607; CalBRE Regs. §2848]

Any disclosure about terms made in a consumer mortgage advertisement is to be clear in its wording and conspicuous to those solicited. If the advertisement is online or televised, the disclosures may not be obscured or shaded. For radio advertisements, the speed of the delivery of information by voice may not be so rapid as to make the disclosure incomprehensible. [12 CFR §1026.24(b); Staff Commentary 12 CFR §1026.24(b)]

When an advertisement for any type of mortgage includes a payment amount, interest rate, APR or other specific mortgage term, it then needs to indicate whether the mortgage advertised will be in a first lien or junior lien. [CalBRE Regs. §2848(a)(6)]

Availability of advertised mortgages

If a mortgage advertisement provides specific mortgage terms, the licensee must actually have a product available with the advertised terms. [CalBRE Regs. §2848; 12 CFR §1026.24(a); Staff Commentary 12 CFR §1026.24(a)]

Further, advertisements misrepresenting the likelihood a consumer will be approved for the advertised mortgage violate Regulation N. [12 CFR §1014.3(q); 12 CFR §1014.3(r)]

Interest rates

An advertisement offering a consumer mortgage which states a simple interest rate also needs to state the annual percentage rate (APR) with at least equal prominence to the rate stated. When a teaser rate applies, MLOs may advertise that rate if the term of its duration is also stated. [12 CFR §1026.24(c); Staff Commentary 12 CFR §1026.24(c)-2, 4]

Further, the CalBRE requires all mortgage advertisements offering “low rates” to include the actual interest rates available. [CalBRE Regs. §2848(a)(2)]

Fixed vs. adjustable

To use the word “fixed” when advertising a consumer mortgage that is an adjustable rate mortgage (ARM):

  • the phrase “Adjustable-Rate Mortgage,” “Variable-Rate Mortgage,” or “ARM” needs to appear first in the advertisement before any use of the word “fixed” and be at least as conspicuous in the advertisement as any use of the word “fixed”; and
  • each use of the word “fixed” to refer to a rate or payment needs to include an equally prominent statement of the period for the fixed rate or payment and that the rate or payment may increase after the period. [12 CFR §1026.24(i)(1)(i)]

For example, advertising a “fixed interest rate” without first stating the interest rate is variable and then clarifying that the rate is only fixed for an introductory period violates Regulation N. [12 CFR §1014.3(g)]

Costs and fees

Advertisements using terms such as “no costs” or “no fees” are deemed misleading by both CalBRE and Regulation N. Costs and fees are part of any mortgage transaction, whether they are paid up-front by the borrower or added to the mortgage amount and presented as an increased APR.

For instance, a consumer mortgage advertisement may not claim that the mortgage offered has “No fees!” if fees are charged and simply bundled into the mortgage amount. [12 CFR §§1014.3(c)-(d)]

Triggering terms

The use of some words or phrases in consumer mortgage advertisements trigger the need to include additional disclosures in the advertisement. Called triggering terms, these words and phrases needing disclosures include:

  • the amount or percentage of any down payment, e.g., “For as little as 3.5% down!” [Staff Commentary 12 CFR §1026.24(d)(1)-1];
  • the number of payments or period of repayment, e.g., “30-year mortgage” [Staff Commentary 12 CFR §1026.24(d)(1)-2];
  • the amount of any payment, e.g., “$500,000 mortgage for just $1,650 per month” [Staff Commentary 12 CFR §1026.24(d)(1)-3]; or
  • the amount of any finance charge, e.g., “$50,000 mortgages, two points to the borrower.” [Staff Commentary 12 CFR §1026.24(d)(1)-4; 12 CFR §1026.24(d)(1)]

If any of the triggering terms are present in the advertisement, the following disclosures need to be included in the advertisement:

  • the amount or percentage of the down payment (e.g. “10% cash required from the buyer”);
  • the number, amount and period of payments over the full term of the mortgage, including any allowable balloon payment;
  • the “annual percentage rate,” using that term; and
  • whether the rate may be increased after closing. [12 CFR §1026.24(d)(2)]

Further, if a specific periodic payment amount is stated in the advertisement, it needs to include:

  • the principal amount;
  • the simple annual interest rate; and
  • if the mortgage is an ARM, the maximum interest rate, how often the interest rate can change and the ARM caps. [CalBRE Regs. §2848(a)(5), (17)]

Envelopes, banner advertisements and pop-up advertisements are exempt from the full rate and payment disclosures. [12 CFR §1026.24(f)(4)]

Prohibited advertising

Prohibited under both state and federal mortgage laws is the use of:

  • false lender identification;
  • false government identification;
  • simulated checks; and
  • discriminatory content.

False lender identification

Prohibited in all mortgage marketing is any use of the name or logo of the addressee’s current mortgage holder, or the addressee’s current mortgage number, unless the advertisement:

  • discloses with equal prominence the name of the person sending the advertisement; and
  • includes a clear and conspicuous statement that the person advertising is not associated with or acting on behalf of the current mortgage holder. [Bus & P C §§14701(a), 14702; 12 CFR §1014.3(o), 12 CFR §1026.24(i)(4)]

Further, the name the licensee uses as the sender may not be so close to the name of the addressee’s current mortgage lender that a reasonable person might believe they are the same entity or affiliates. [Bus & P C §14701(b)]

However, fair use of the existing mortgage holder’s name is allowed. For example, an advertisement which clearly identifies and differentiates the licensee from the addressee’s existing mortgage holder may use the name and logo of the existing mortgage holder when comparing products and services of the two mortgage lenders. [Bus & P C §14703]

Violation of the false identification prohibitions exposes the CalBRE licensee to liability for:

  • any actual money losses suffered by the recipient;
  • court costs; and
  • attorney fees. [Bus & P C §14704]

False government identification

A CalBRE licensee may not use a seal, emblem, insignia, symbol, trade or brand name which implies a connection to or approval by any government or military organizations, unless the licensee:

  • has an express connection to or approval from a government agency; or
  • displays the following disclosure conspicuously on all advertisements, including television commercials:


If mailed, the envelope of the advertisement is to state:

“THIS IS NOT A GOVERNMENT DOCUMENT.” [Bus & P C §17533.6; 12 CFR §1014.3(o)]

Further, unless a mortgage is endorsed or sponsored by a federal, state or local government entity, federal law prohibits advertising a mortgage as a “government loan program”, “government-supported loan”, or as endorsed or sponsored by any federal, state, or local government entity. [Bus & P C §17533.6; 12 CFR §1026.24(i)(3)]

Simulated checks

Use in any mortgage marketing of paperwork resembling a check that is not a negotiable instrument is prohibited in California. [Bus & P C §22433(a)]

These simulated checks mislead the addressee to believe they have received or are guaranteed money that is not immediately available to them.

Violation of the simulated checks prohibition exposes the CalBRE licensee to a civil penalty of $100 per violation. [Bus & P C §22433]

Other prohibitions

CalBRE licensees are prohibited from making or using mortgage marketing advertisements which in any way discriminate based on race, color, sex, religion, ancestry, physical handicap, marital status or national origin. [CalBRE Regs. §2780]

Prohibited advertisements include any claim the consumer mortgage offered will eliminate debt or result in a waiver or forgiveness of an existing mortgage held by another lender. [12 CFR §1014.3(m), 12 CFR §1026.24(i)(5)]

Use of the term “counselor” is prohibited in an advertisement for a consumer mortgage when referring to a for-profit mortgage broker or mortgage lender. For instance, an advertisement by a for-profit MLO may not state the MLO’s “government loan housing counselors are standing by!” [12 CFR §1026.24(i)(6)]

Additionally prohibited is the stating of information in a consumer mortgage advertisement about some triggering terms in a foreign language when information in the same advertisement about other triggering terms is provided only in English. [12 CFR §1026.24(i)(7)]

CalBRE review

CalBRE licensees may submit their mortgage advertisements to the CalBRE for approval. The cost of the advertising review is $40 per advertisement. [CalBRE Regs. §2847; see CalBRE Form RE 884]

CalBRE approval is not mandatory, but can avoid the exposure to producing, printing and running an advertisement that is later deemed unacceptable.

CalBRE advertising approval is good for five years. [Bus & P C §10232.1]

CalBRE’s advertising review only checks for adherence to CalBRE regulations and related state real estate law. CalBRE approval of mortgage ads does not in any way ensure compliance with federal consumer mortgage advertising rules.