Holly Petraeus issues warning … to mortgage bankers

Holly Petraeus could probably use something to get her mind off her personal life.  Targeting mortgage companies that might be misleading consumers seemed to be just the antidote on Monday.

Petraeus —whose husband, former CIA Director David Petraeus, is currently embroiled in an investigation into his affair with his biographer — serves as the Assistant Director for the Office of Servicemember Affairs at the U.S. Consumer Financial Protection Bureau.  She released a statement on Monday warning consumers not to be mislead by false mortgage advertising.

“Please, be cautious.  If you get an ad that sounds a little (or a lot) too good to be true, you should get more information from a trusted source before you respond to the offer,” Holly Petraeus wrote in a statement along with fellow CFPB assistant director Skip Humphrey.

The announcement comes as the CFPB teamed up with the Federal Trade Commission to send warning letters to about a dozen mortgage lenders and brokers not to mislead consumers with ambiguous advertising; and also launched investigations into six other companies.

“Misrepresentations in mortgage products can deprive consumers of important information while making one of the biggest financial decisions of their lives,” CFPB Director Richard Cordray said .  “Baiting consumers with false ads to buy into mortgage products would be illegal. We will conduct a fair and rigorous investigation into these issues and will take appropriate action for any violations we find.”

The crackdown comes as part of the Mortgage Acts and Practices Advertising Rule of 2011, which prevents companies from making misleading statements regarding mortgages, interest rates and costs. 

CFPB and the FTC conducted a review of 800 mortgage ads and found several things they said could be potentially misleading.  Some ads misrepresented interest rates, the amount of cash and credit available to consumers or the costs of reverse mortgages.  Others had official-looking seals investigators were concerned would cause consumers to think the government endorsed that particular company.   

“The warning letters will advise the recipients that their ads may violate federal laws, and that they should review all their advertising,” said a CFPB press release. “Opening an investigation is not an accusation of wrongdoing.  Investigations are fair and reasonable inquiries into a matter and may exonerate the subject of the investigation. “