Feds propose social media guidance for mortgage lenders

Responding to requests from industry and consumer groups, federal regulators have released proposed guidance for financial institutions to follow when using social media to market products including residential mortgage loans.

The proposed guidance does not impose additional obligations, but is a reminder that consumer protection and compliance laws like the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA) can come into play on social media channels.

The 31-page proposal issued this week by the Federal Financial Institutions Examination Council stipulates, for example, that financial institutions engaged in residential mortgage lending will display the Equal Housing Opportunity logo on their Facebook page.

Social media communications in which lenders advertise loan products should also comply with advertising provisions of TILA's Regulation Z, which requires disclosures about loan terms and costs, the proposed guidance said.

RESPA, which prohibits lenders and settlement services providers like title insurers from fee splitting or giving or accepting kickbacks in exchange for referrals, also has specific timing requirements for certain disclosures. These requirements apply to applications taken electronically, and the proposed guidelines state that includes social media channels.

The FFIEC -- an interagency body that charged with drawing up uniform principles and standards for the federal examination of financial institutions by regulators including the Federal Reserve, Consumer Financial Protection Bureau, and National Credit Union Administration -- will accept comments on the proposed guidance for 60 days.

The FFIEC said it is specifically seeking comments on the following questions:

• Are there other types of social media, or ways in which financial institutions are using social media, that are not included in the proposed guidance but that should be included?

• Are there other consumer protection laws, regulations, policies or concerns that may be implicated by financial institutions' use of social media that are not discussed in the proposed guidance but that should be discussed?

• Are there any technological or other impediments to financial institutions' compliance with applicable laws, regulations and policies when using social media of which the agencies should be aware?