2848. Advertising Criteria.

2848. Advertising Criteria.
(a) In administering Sections 10232.1 and 10235 of the Code, the commissioner shall take such action as is appropriate
to prevent or halt the publication of advertising that is false, misleading or deceptive in itself or through the omission
of information necessary to make a representation not misleading in the context in which it is used. To this end, the
commissioner may disapprove or require verification of representations in advertising submitted pursuant to Section
10232.1 of the Code, or Section 2847 of these regulations.
In addition to the actual text, consideration shall be given to such factors as format, pictorial display and emphasis in
determining whether an advertisement is likely to create a false impression.

By way of illustration and not of limitation, advertising containing any of the following is considered to be false,
misleading or deceptive and will not ordinarily be approved for publication by the commissioner:

(1) The use of “guaranteed,” “insured,” “bonded,” “sure,” “safe,” “sound” or other words or phrases of similar
import to describe or characterize the security of lenders' or purchasers' funds, or the return to lenders or purchasers
from the use of their funds, without an accompanying statement of fact supporting the use of the words or phrases
implying high security. A representation to the effect that no losses or minimal losses have been sustained by lenders
or purchasers doing business with the licensee shall include the period of time to which the representation applies.
(2) The use of terms in the comparative or superlative degree to describe any aspect of the business of the licensee,
or any terms applicable to loans negotiated by the licensee, without such additional information as necessary to
make the representation unambiguous in the context in which it is used.
(3) A statement that the licensee represents any lender enumerated in Section 10133.1(a) of the Code unless the
licensee has a contractual arrangement to act as agent or representative for such lender.

(4) An implication contrary to the fact that the licensee will act in the capacity of a lender rather than as an agent or
that a borrower will be able to obtain a loan without deductions from the principal amount for the payment of
commissions, costs and expenses customarily attendant upon mortgage loan broker transactions.
(5) A representation of a specific installment in repayment of a loan without an equally prominent disclosure of the
following information about the loan:
(A) Principal amount

(B) Simple annual interest rate



(C) Annual percentage rate
(D) Number, amount and period of payments scheduled to the date of maturity

(E) Balance due at maturity (balloon payment) if not fully amortized.
(6) A representation of a specific installment payment, interest rate, annual percentage rate or other provision
concerning a loan unless it is clearly indicated whether the advertised terms are available for first loans, junior loans
or for both first and junior loans.
(7) A representation or implication that loans are available on terms more favorable to the borrower than terms then
generally available in the community through mortgage loan brokers or other sources for loan funds unless the
advertised terms are in fact then available to a borrower without the application of undisclosed, special conditions
or restrictions to qualify the borrower or the security for the loan.

(8) A representation or implication that loans are available on terms more favorable to the borrower than terms then
generally available in the community through mortgage loan brokers or other sources for loan funds unless the
broker has previously presented evidence satisfactory to the commissioner that the advertising is not illusory or
deceptive in light of all relevant factors of the broker's business practices including the amount of loan funds
prospectively available to meet borrower demands in response to the advertising.
(9) A representation that loans are available at or to a maximum percentage of market value unless there is a
disclosure as to how market value will be determined for purposes of a loan transaction.
(10) A representation or implication that the credit rating or other personal financial data of the prospective borrower
will not be a factor in determining eligibility for a loan unless the broker in fact neither conducts nor causes to be
conducted any investigation or inquiry into any aspect of any prospective borrower's credit rating or into his personal
financial circumstances for the purpose of determining his qualifications for a loan.
(11) A representation or implication that a loan can or will be approved by telephone.

(12) A representation implying that the Bureau or any other governmental agency has endorsed or approved any
aspect of the licensee's business activities. A statement that the offering referred to in the advertisement is being
made under authority of a permit issued by the Bureau or by the Department of Business Oversight without more,
will not be considered to be a representation implying endorsement or approval by a governmental entity.

(13) A representation or implication contrary to fact as to the number and location of offices maintained by the
licensee for the conduct of his/her mortgage loan brokerage business.
(14) Use of “investment plan,” “growth plan,” or similar term to describe a program of a licensee carrying on
activities described in Section 10131.1.
(15) The use of “savings,” “savings plan” or terms of similar import indicating that the licensee is engaged in
business activities requiring a particular license, permit or authority unless the licensee then has such a license,
permit or authority.
(16) A representation of a simple annual interest rate without an equally prominent disclosure of the annual
percentage rate.
(17) A representation of an installment in repayment of an adjustable rate, interest only or payment-option loan
without an equally prominent disclosure of the following information about the loan:

(A) Principal amount
(B) Term of loan
(C) Initial interest rate

(D) Number of months the initial interest rate will be in effect
(E) Fully-indexed interest rate
(F) Maximum interest rate

(G) If different, an explanation of the difference between the payment rate, initial interest rate and fully-indexed
rate.



(H) Annual percentage rate
(I) How often the interest rate and payments can change

(J) Maximum periodic change in the interest rate and payments (periodic caps)
(K) Number of months and percentage of original loan amount after which minimum payments will not be
accepted and the loan re-amortizes
(L) The monthly payment based on the maximum interest rate, and the loan balance after all negative
amortization is included, assuming minimum payments are made

(M) If the loan contains a prepayment penalty, a statement to that effect
(N) If the loan contains a balloon payment, a statement to that effect

(18) A statement that the licensee can arrange “low doc/no doc”, “no income/no asset”, “stated income”, “stated
asset”, “no ratio” or similar loan products without a statement that these products may have a higher interest rate,
more points or more fees than other products requiring documentation.
(19) The failure to include a statement, in an advertisement for investments in trust deeds secured by one or more
interests in real property, that “investments in trust deeds secured by one or more interests in real property are
subject to risk of loss”. Any advertisements, for investments in trust deeds secured by one or more interests in real
property shall be retained for a period of three years from the date of its last publication or use. After notice,
advertisements for investments in trust deeds secured by one or more interests in real property shall be made
available for examination, inspection, and copying by the commissioner or his or her designated representative
during regular business hours.