California Code of Regulations › Title 10 - Investment › Chapter 6 - Real Estate Commissioner › Article 16 - Mortgage Loan Brokerage › Section 2848 - Advertising Criteria

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) In
				administering Sections
				10232.1 and
				10235 of the Code, the
				commissioner shall take such action as is appropriate to prevent or halt the
				publication of advertising that is false, misleading or deceptive in itself or
				through the omission of information necessary to make a representation not
				misleading in the context in which it is used. To this end, the commissioner
				may disapprove or require verification of representations in advertising
				submitted pursuant to Section
				10232.1 of the Code, or Section
				2847 of these regulations.
In addition to the actual text, consideration shall be given
				  to such factors as format, pictorial display and emphasis in determining
				  whether an advertisement is likely to create a false impression.
By way of illustration and not of limitation, advertising
				  containing any of the following is considered to be false, misleading or
				  deceptive and will not ordinarily be approved for publication by the
				  commissioner:
(1) The use of
				"guaranteed," "insured," "bonded," "sure," "safe," "sound" or other words or
				phrases of similar import to describe or characterize the security of lenders'
				or purchasers' funds, or the return to lenders or purchasers from the use of
				their funds, without an accompanying statement of fact supporting the use of
				the words or phrases implying high security. A representation to the effect
				that no losses or minimal losses have been sustained by lenders or purchasers
				doing business with the licensee shall include the period of time to which the
				representation applies.
(2) The use
				of terms in the comparative or superlative degree to describe any aspect of the
				business of the licensee, or any terms applicable to loans negotiated by the
				licensee, without such additional information as necessary to make the
				representation unambiguous in the context in which it is used.
(3) A statement that the licensee represents
				any lender enumerated in Section
				10133.1(a) of the
				Code unless the licensee has a contractual arrangement to act as agent or
				representative for such lender.
(4)
				An implication contrary to the fact that the licensee will act in the capacity
				of a lender rather than as an agent or that a borrower will be able to obtain a
				loan without deductions from the principal amount for the payment of
				commissions, costs and expenses customarily attendant upon mortgage loan broker
				transactions.
(5) A representation
				of a specific installment in repayment of a loan without an equally prominent
				disclosure of the following information about the loan:
(A) Principal amount
(B) Simple annual interest rate
(C) Annual percentage rate
(D) Number, amount and period of payments
				scheduled to the date of maturity
(E) Balance due at maturity (balloon payment)
				if not fully amortized.
(6) A representation of a specific
				installment payment, interest rate, annual percentage rate or other provision
				concerning a loan unless it is clearly indicated whether the advertised terms
				are available for first loans, junior loans or for both first and junior
				loans.
(7) A representation or
				implication that loans are available on terms more favorable to the borrower
				than terms then generally available in the community through mortgage loan
				brokers or other sources for loan funds unless the advertised terms are in fact
				then available to a borrower without the application of undisclosed, special
				conditions or restrictions to qualify the borrower or the security for the
				loan.
(8) A representation or
				implication that loans are available on terms more favorable to the borrower
				than terms then generally available in the community through mortgage loan
				brokers or other sources for loan funds unless the broker has previously
				presented evidence satisfactory to the commissioner that the advertising is not
				illusory or deceptive in light of all relevant factors of the broker's business
				practices including the amount of loan funds prospectively available to meet
				borrower demands in response to the advertising.
(9) A representation that loans are available
				at or to a maximum percentage of market value unless there is a disclosure as
				to how market value will be determined for purposes of a loan
				transaction.
(10) A representation
				or implication that the credit rating or other personal financial data of the
				prospective borrower will not be a factor in determining eligibility for a loan
				unless the broker in fact neither conducts nor causes to be conducted any
				investigation or inquiry into any aspect of any prospective borrower's credit
				rating or into his personal financial circumstances for the purpose of
				determining his qualifications for a loan.
(11) A representation or implication that a
				loan can or will be approved by telephone.
(12) A representation implying that the
				Bureau or any other governmental agency has endorsed or approved any aspect of
				the licensee's business activities. A statement that the offering referred to
				in the advertisement is being made under authority of a permit issued by the
				Bureau or by the Department of Business Oversight without more, will not be
				considered to be a representation implying endorsement or approval by a
				governmental entity.
(13) A
				representation or implication contrary to fact as to the number and location of
				offices maintained by the licensee for the conduct of his/her mortgage loan
				brokerage business.
(14) Use of
				"investment plan," "growth plan," or similar term to describe a program of a
				licensee carrying on activities described in Section
				10131.1.
(15) The use of "savings," "savings plan" or
				terms of similar import indicating that the licensee is engaged in business
				activities requiring a particular license, permit or authority unless the
				licensee then has such a license, permit or authority.
(16) A representation of a simple annual
				interest rate without an equally prominent disclosure of the annual percentage
				rate.
(17) A representation of an
				installment in repayment of an adjustable rate, interest only or payment-option
				loan without an equally prominent disclosure of the following information about
				the loan:
(A) Principal amount
(B) Term of loan
(C) Initial interest rate
(D) Number of months the initial interest
				rate will be in effect
(E)
				Fully-indexed interest rate
(F)
				Maximum interest rate
(G) If
				different, an explanation of the difference between the payment rate, initial
				interest rate and fully-indexed rate.
(H) Annual percentage rate
(I) How often the interest rate and payments
				can change
(J) Maximum periodic
				change in the interest rate and payments (periodic caps)
(K) Number of months and percentage of
				original loan amount after which minimum payments will not be accepted and the
				loan re-amortizes
(L) The monthly
				payment based on the maximum interest rate, and the loan balance after all
				negative amortization is included, assuming minimum payments are made
(M) If the loan contains a prepayment
				penalty, a statement to that effect
(N) If the loan contains a balloon payment, a
				statement to that effect
(18) A statement that the licensee can
				arrange "low doc/no doc", "no income/no asset", "stated income", "stated
				asset", "no ratio" or similar loan products without a statement that these
				products may have a higher interest rate, more points or more fees than other
				products requiring documentation.
(19) The failure to include a statement, in
				an advertisement for investments in trust deeds secured by one or more
				interests in real property, that "investments in trust deeds secured by one or
				more interests in real property are subject to risk of loss". Any
				advertisements, for investments in trust deeds secured by one or more interests
				in real property shall be retained for a period of three years from the date of
				its last publication or use. After notice, advertisements for investments in
				trust deeds secured by one or more interests in real property shall be made
				available for examination, inspection, and copying by the commissioner or his
				or her designated representative during regular business
				hours.