Important Proposed Rule for SCUs — FTC Mortgage Advertising

Oct. 18, 2010 — The Federal Trade Commission (FTC) issued a proposed rule on unfair and deceptive acts and practices related to mortgage advertising. The rule, issued pursuant to the 2009 Omnibus Appropriations Act and the Credit Card Accountability, Responsibility and Disclosure Act of 2009 (Credit CARD Act) would (1) prohibit any misrepresentation in any commercial communication regarding any term of any mortgage credit product; and (2) impose recordkeeping requirements on covered entities.

The FTC has determined that the proposed rule is being issued within the scope of the Administrative Procedure Act and not the FTC Act. This has major implications for state-chartered credit unions. Because of FTC's characterization of the genesis of the proposal, the rule would apply to all entities "regulated" by the FTC (including state-chartered credit unions) but would not invoke the FTC Act requirement that federal banking agencies promulgate similar rules.

In other words, FTC's proposed rule would not apply to federal credit unions, or national or state-chartered banks. NASCUS urges its members to pay particular attention to this rule, and to provide its feedback to NASCUS by November 5. NASCUS believes SCUs should be exempt from this rule, and continues to discuss the issue with the FTC. The comment period closes November 15.

NASCUS members can view a summary of the proposed rule at this link. (Member log-in required).