Understanding Mortgage Advertising Record Retention Requirements

By Gabriel Ruzin

The regulations governing advertising in the mortgage industry are numerous and wide-ranging, but the fact remains that there will always be a select few officers, brokers, and even servicers that may always seek to flaunt the rules in the chase of a quick buck and an edge over the competition. So what stops a company’s social media account or advertising firm from creating a ‘short term’ law-defying online post or a ‘one off’ advertisement in the hopes that its brief shelf life will fly under the CFPB’s radar? The answer to that is simple: record retention requirements, explicitly designed to stop just such a thing from happening.


If a private citizen posts hurtful, inappropriate, or otherwise problematic content, they might be prompted to delete the post, have their account suspended for a certain length of time, or (at worst) banned completely. If a mortgage servicer posts something that violates industry regulations, not only is it illegal, but retention requirements prevent them from deleting the post and sweeping it under the rug to avoid penalty. The CFPB’s current rule regarding record retention states that creditors must preserve records of all commercial communications and advertising for at least two years after the posted date, regardless of content, context, or manner of conveyance. This includes marketing via social media.


However, many states have even stricter rules when it comes to record retention. Although 26 states follow the federal guidelines of two years, several states require an even longer period of retention. For example, Vermont’s laws on the books extend the requirement to as long as seven years. And in the case of Arkansas and Nevada, the requirement is considered ‘indefinite,’ which means that ALL advertisements in those states - including those on social media - must be retained by servicers, for all intents and purposes, forever.


Any attempt by a servicer to ‘hide’ or otherwise fail to retain marketing materials per the CFPB’s record retention requirement clause - regardless of whether said omission is intentional - is considered to be a serious violation of the Truth in Lending Act (TILA). The penalty for TILA infractions can involve fines of up to $5000, fines equal to the affected customer’s finance charges & attorney’s fees, even up to a year in prison for the individual offender. If it is determined that a company’s record retention omissions were purposeful, the CFPB is within its rights to classify the lapse as a Unfair, Deceptive, or Abusive Act or Practice (UDAAP), which brings with it a whole new set of penalties.


In short, just as any mortgage company would and should dutifully preserve records of every customer’s loan file for posterity, so must it store all documentation when it comes to its advertising efforts. The rules governing appropriate marketing in the mortgage industry are rigid and the penalties harsh for violators and it is in the best interest of any law-abiding servicer to have ready proof that they are playing the game fairly in today’s turbulent market.