NMP - July 2018 - 76

special focus on SOCIAL MEDIA a special focus on SOCIAL MEDIA a special focus on SO

Navigating the Expansive Waters
of Social Media Marketing and Compliance
in the Mortgage Industry
By Mary Kamelle

he mortgage
industry is a highly
regulated industry
and for good
reasons that were in
large part caused
by the industry itself. In 1994,
predatory lending practice laws
were passed to protect
borrowers from unscrupulous
lenders. Later, the Home
Ownership and Equity
Protection Act (HOEPA) was
created to combat things like
financing excessive fees,
excessive prepayment penalties,
negative amortization and
aggressive and deceptive
marketing practices.
Regulations were passed after
the sub-prime mortgage
debacle and the subsequent
housing crisis to make sure
stricter, more transparent
guidelines were put in place to
protect borrowers. If history is
any indicator of future behavior,
we will continue to need some
level of protection because any
time you have a large financial
transaction that involves a
financial expert working with a
borrower who is not as
sophisticated there is the
possibility of abuse.
According to an article by
Ben Smidt on the MGICConnects Web site, he writes,
"As a mortgage industry
professional, social media is one
of the most valuable touchpoints you can have with your
customers and prospects. A
sound social media strategy can
provide increased business
opportunities, in particular, for
first-time homebuyers."
The popular opinion regarding
social media marketing is that it
is a necessity. As such, it needs
to be regulated fairly to protect
the customer, but also the Loan
Officer and the Lender, as well.
So what is social media?
There is no shortage of
definitions:

T

JULY 2018 n National Mortgage Professional Magazine n

NationalMortgageProfessional.com

76

1. Social media is Web sites
and applications that enable
user to create and share

content or to participate in
social networking.
2. Media that allows discussion
and interaction as opposed to
broadcast only.
3. The facilitation and practice of
engagement and conversation
online.
4. Merriam-Webster Definition of
"Social Media:" Forms of
electronic communication
(such as Web sites for social
networking and micro
blogging) through which users
create online communities to
share information, ideas,
personal messages and other
content (such as videos).
What is meant by the word
"Content?" Content includes the
following:
l Articles
l Blogs
l Written word pieces
l Videos
l Live broadcasts
l GIFs
l Ads
l E-mails
l Texts

The top five most popular apps
for mortgage professionals to use
for social media marketing are:
l
l
l
l
l

Facebook
YouTube
Twitter
Instagram
LinkedIn

Who regulates social
media marketing for the
mortgage industry?
The Consumer Finance

Protection Bureau (CFPB)
regulates all social media
marketing for the mortgage
industry. According to the
CFPB, "Financial institutions
are using social media as a tool
to generate new business and
interact with consumers. Social
media, as any new
communication technology, has
the potential to improve market
efficiency. Social media may
more broadly distribute
information to users of financial
services and may help users
and providers find each other
and match products and
services to users' needs. To
manage potential risks to
financial institutions and
consumers, however, financial
institutions should ensure their
risk management programs
provide oversight and controls
commensurate with the risks
presented by the types of
social media in which the
financial institution is engaged."
Most state jurisdictions also
have laws to protect consumers
from unfair and deceptive,
lending practices. These laws
are codified for and directed to
mortgages lenders and other
financial service providers.
Lastly, states can sometimes
set regulations that are more
strict than federal regulations,
therefore, it makes sense to
know both federal, as well as,
any unique regulations for your
state jurisdiction.
There are a number of
regulations that outline the dos
and don'ts of marketing for
professionals in the housing
industry. One of the most wellknown is the Real Estate
Settlement Procedures Act
(RESPA).
RESPA covers loans secured
with a mortgage placed on oneto four-family residential
properties. Originally enforced
by the U.S. Department of
Housing & Urban Development
(HUD), RESPA enforcement
responsibilities were assumed
by the CFPB when it was
created in 2011. RESPA

prohibits activities relating to
individuals working in Real
Estate, Mortgage and
Settlement Services
professions from engaging in
fee splitting, giving or
accepting a fee, kickback or a
thing of value in exchange for
referrals of settlement services.
This includes applications taken
on line, electronically or via
social media.
Co-marketing with your
business partners and referral
partners is widely popular, if
you do it fairly and
transparently, you will not
violate RESPA. You should pay
close attention to third-party
sites that want to provide leads
for Loan Officers and Realtors.
Internal controls must be
established to make sure that
there is no arrangement,
whereby a Loan Officer is
paying a Realtor for a lead or
giving the impression that they
are providing a thing of value to
a realtor.
Recently, the CFPB was
investigating Zillow for its comarketing with Loan Officers
and Realtors. The investigation
centered on lead-sharing and
co-marketing relationships.
Lenders need to make sure
they have a policy in place
regarding lead share and that it
states clearly that each party
must pay for their own
marketing efforts and
borrowers are free to use the
lender of their choice.
The Fair Lending Laws are
applicable to Loan Officers' use
of social media marketing.
Lenders and LO's must be sure
that their use of social media
does not violate these laws.
1. The Equal Credit
Opportunity Act, as
implemented by Regulation
B, prohibits creditors from
making any oral or written
statement, in advertising or
other marketing techniques,
to applicants or prospective
applicants that would
discourage on a prohibited


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