In today’s highly regulatory environment, not having the proper corporate control can be extremely costly.
You’re faced with a difficult choice. On the one hand, with fierce competition intensifying to attract new borrowers, you need to use every marketing tool at your disposal to drive high-quality business to the point-of-sale. On the other hand, a flood of new rules and regulation is seriously impacting how you can and can’t market to prospective borrowers.
Until now relatively little attention has been paid to the laws and rules that bear upon mortgage marketing. There’s an array of mortgage-specific regulations that constrain marketing activity, notably certain provisions of the SAFE Act. Looking beyond the mortgage market, we find yet more regulations (at both the federal and state level) that come into play. The bottom line is that we are now operating in an environment where mortgage marketing attracts greater scrutiny than ever before – not only by regulatory authorities, but also by trade associations and consumer groups.
What follows is not intended to be a comprehensive or authoritative survey of the law as it currently stands. The writer is not a lawyer and this is not meant to be an exhaustive review of all laws impacting mortgage marketing. It’s simply an indication of the scope and type of pitfalls that await the unwary.
Licensing And Legal Disclosure
The Secure and Fair Enforcement for Mortgage Licensing (SAFE) Act of 2008 “is designed to enhance consumer protection and reduce fraud by encouraging states to establish minimum standards for the licensing and registration of state-licensed mortgage loan originators.” The major consequence of the Act was the establishment of the National Mortgage Licensing System (NMLS) and Registry. An originator’s NMLS number must now be displayed in specific relationship to their name and contact information on all outbound marketing communications.
In addition, marketing communications must incorporate the relevant legal disclosure per jurisdiction in which the company operates. How and where this information is displayed is typically indicated in state law, down to details such as minimum font size. Originators must, of course, be licensed to operate in a particular state before they can communicate with anyone living in that state.
Data Protection And Privacy
The Financial Services Modernization Act (commonly known as Gramm-Leach-Bliley, or simply GLB) became federal law in 1999. Title V of the Act covers issues of data privacy, including giving consumers certain opt-out rights regarding their non-personal public information. It is clear from the Act’s language that the responsible party is deemed to be the financial institution rather than individual sales agents or marketing executives.
The Telephone Consumer Protection Act of 1991 was the first to introduce controls on the unwelcome attentions of telemarketing operators. The Do-Not-Call Implementation Act came in 2003, which established the FTC’s “National Do Not Call Registry”. The Do-Not-Call Improvement Act followed in 2007, which tightened a key provision in the consumer’s favor: they need only register once, for life. Many states have introduced complementary measures, including Do Not Mail legislation that typically creates a consumer registry at the state level.
The CAN-SPAM Act of 2003 sets rules for the commercial use of email, which it defines as “any electronic mail message the primary purpose of which is the commercial advertisement or promotion of a commercial product or service”. Among the law’s key provisions are prohibitions on the use of false or misleading header information and deceptive subject lines plus, perhaps most significantly, the requirement for a clear and conspicuous mechanism for the recipient to opt out of future emails, either selectively or in their entirety – which many do, raising serious questions about the effectiveness of email as a business-to-consumer marketing medium.
Regulatory compliance is one thing, but professionalism and adherence to corporate brand standards must also be assured. The topic is raised here since this is a natural although non-legal extension of the other issues discussed: the solutions are going to come from similar processes of management control to those that meet the challenges of compliance.
Mortgage Marketing Compliance
For some mortgage bankers – anxious to avoid costly lawsuits or simply to maintain (or restore) their reputation for transparency and professionalism – the response to the ever-tightening regulatory environment has been to issue policy statements to loan originators and/or require them to obtain approval before doing anything.
Clearly the MAP Final Rule has rendered this approach inadequate. Apart from which, blanket prohibitions were never likely to be effective. In the first place they run counter to human nature; people forget – and punishment after the fact is too late since the damage is already done. More significantly, speed to market is lost. Windows of opportunity open and close so quickly in today’s roller coaster mortgage market that even a brief delay can be disastrous. In any case, this is a highly inefficient solution, expensive to administer and wasteful of human resources.
What if there was a way to get the marketing compliance issues handled that at the same time brings with it the benefit of superior operational efficiency?
We all know that we can’t reproduce copyrighted language – at least not without first obtaining permission from the copyright holder. What many don’t know is that photographs and other images of celebrities (alive or dead) are also typically protected under copyright law or under various “rights of publicity” laws, which can vary from state to state. In general, unless specific permission is granted, you may not use the image of a celebrity in marketing communications of any kind. Even if you own both a photograph of a celebrity and the copyright of the photograph, it still doesn’t give you the right to do anything with it in the absence of proper approval by the celebrity or their licensing agent.
Although not a copyright issue as such, it‘s also necessary to guard against the use of offensive language and graphics in marketing communications. These too can lead to legal entanglements – or at least they can become a source of serious embarrassment to the mortgage banker.
It’s clear that the tentacles of regulation are now reaching into all aspects of mortgage operations, not least the marketing side. The days are long gone when a mortgage banker could turn loan originators loose to do their own marketing. In the new world this is simply too dangerous.
Management has to take an active role in ensuring the company’s brands and its products are correctly and compliantly represented in the marketplace. Outbound communications with prospects, customers and referral partners – whether driven from the center or by originators – must be controlled, without inhibiting genuine creativity and individual initiative.
So how does a mortgage banker establish a controlled environment that ensures sales and marketing people are adhering to all relevant regulations, but at the same time still allows ingenuity and enterprise to flourish? Simple oversight of all outbound marketing – including variable communication content, such as personalized copy and graphics – is a good start, but it’s not enough.
What’s needed is rules-driven technology – a compliance-centric corporate marketing solution — that handles the regulatory requirements, thereby minimizing reliance on human intelligence.
This technology needs to provide graded levels of control over the players in the marketing process. Management simply has to decide what degree of control to exercise in relation to each of the system’s key functions.
The levels of management control might follow the pattern below, working down from the most to the least restrictive:
Prohibition: Different types of users can be prevented from accessing specific system functions by means of a customizable “permissions” capability.
Authorization Marketing materials created by users at lower levels in the corporate hierarchy cannot be implemented until approved at the center.
Alerts: A defined set of fields is monitored and changes are reported via an online feed, enabling quick action to remedy any departure from company policy.
Oversight: Users at higher levels in the hierarchy can “impersonate” users at lower levels, giving management an instant window on the activities of originators.
Reporting: A dashboard of mission-critical metrics provides information that allows management to hold users at lower levels accountable for their performance.
Audit Trail: Online access to a real-time log of actions taken by users, including copies of all-outbound marketing communications (per the MAP Final Rule).
Finally, in order to close the circle on this vital issue, management should implement a regime of regular instruction and training on both current law and how the company’s marketing technology enables compliance, ensuring that everyone involved remains fully conversant with their role and responsibilities in mitigating the inherent risks.
The right marketing automation provider delivers a proven enterprise-wide marketing automation solution that supports you and your specific initiatives to address market conditions. Each person in your organization that is involved with driving growth is empowered to focus on what they do best.
For example, Loan Originators are free to close more loans, instead of having to create custom marketing materials. C-level executives are presented with sophisticated, yet easy to use tools for more effective oversight and management, while marketing managers can demonstrate their marketing genius and compliantly maintain brand consistency across the entire organization. The right marketing automation provides the ability to:
>> Establish consistent long-term profitability
>> Yield unseen business opportunities
>> Leapfrog the competition
>> Reduce marketing compliance risk
>> Attract new talent and retain top producers
>> Automate company branded marketing
In today’s market with intense competition, mortgage companies cannot afford to stop marketing to prospective borrowers. The key is having the right tools and partner to deliver compliance and control in their mortgage marketing efforts.