Advertising a 'No-Cost' Loan
A brokerage runs a social media ad: 'ALASKA'S LOWEST RATES - ZERO FEES, NO CLOSING COSTS, GUARANTEED APPROVAL IN 24 HOURS.' The ad includes the brokerage's NMLS number but no other disclosures. In practice, the brokerage charges a 1% origination fee, and 'no closing costs' means the borrower accepts a 0.5% higher rate (a lender credit offsets third-party costs). Approval depends on underwriting and typically takes 10 days. An MLO at the firm, Kim, is asked to boost the post and add 'Ask me how - I'll make it work!' She knows two recent applicants were denied.
1. Identify each problematic claim in the ad and why it is a compliance issue.
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(1) 'Lowest rates' is an unsubstantiated superlative - it must be provable or removed. (2) 'Zero fees / no closing costs' is misleading because the borrower pays through a higher rate; the offset must be disclosed clearly and conspicuously, and the 1% origination fee contradicts 'zero fees.' (3) 'Guaranteed approval in 24 hours' is a false promise - no one can guarantee approval, and the actual timeline is about 10 days. (4) The ad lacks required disclosures beyond the NMLS number, and the NMLS number must be presented correctly for the entity. Advertising rules require that ads be accurate, not misleading, and include required identifying and disclosure language.
2. Should Kim boost the post and add her own tagline? What should she do instead?
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No. Boosting and adding 'I'll make it work' would personally associate Kim with misleading claims and could expose her license to discipline. Kim should decline to amplify the ad, notify her compliance contact in writing, and ask that the ad be corrected before any further distribution. If she wants to advertise, she should use compliant language: accurate rate information with required disclosures, a clear statement that approval is subject to underwriting, and a truthful description of costs. She should keep a record of her report. An MLO is responsible for her own advertising even when the firm originated the creative.