The Department of Housing and Urban Development has warned lenders and others against misleadingly using its name, logo or initials or those of the Federal Housing Administration.
On April 15, the department sent lenders a letter with strict guidelines, which go into effect in mid-May, for the conditions under which lenders may display the FHA or HUD logos. For example, a website must clearly identify the lender as the sole author and originator of the site. Further, FHA-approved lenders, nonapproved lenders or third-party originators are prohibited from displaying FHA logos or acronyms in a manner that falsely conveys the impression that the website or publication is an official government form. Violators face fines and other penalties.
The letter cited provisions to the National Housing Act that were enacted in 1998, and HUD's handbook already addresses misrepresentative advertising. "To me it is just reaffirming HUD policy and highlighting it," said Brian Chappelle, a partner at Potomac Partners, a consulting firm in Washington, and a former HUD official.
Why send a reminder? Lemar Wooley, a HUD spokesman, would not say. But a Google search Wednesday turned up a number of sites for companies involved in FHA lending that blurred the distinction between them and the agency.
For example, FHAMortgage.org is a lead-generation site run by New Eclipse Enterprises Inc. of Woodstock, N.Y. Consumers can enter their contact information and type of loan sought into an application form on the site. According to a page on the site, the company is "looking to partner with anyone interested in purchasing exclusive FHA mortgage leads."
The top of the site's home page is festooned with the Stars and Stripes and the slogan "helping Americans realize and secure the dream of homeownership." The disclaimer at the bottom of the page clarifies, in smaller, gray type, that the company behind the site is "Not a government agency, Not a Lender. [sic] Not affiliated with HUD or the FHA."
Rosie Szyszka, a manager at New Eclipse, said that New Eclipse does not originate mortgages but helps FHA lenders find borrowers. Szyszka said she wasn't familiar with HUD's policy on the use of the FHA acronym.
Another lead-generation site, FHA.com, does say in white letters inside a gray bar toward the top of its home page that "FHA.com is a private corporation and is not a government agency." However, two representatives who answered the toll-free number displayed on the site Tuesday apparently didn't realize this.
A salesman said that "FHA.com is the same thing" as the government agency. Another call to the number went through to a saleswoman who said that "FHA.com is the federal housing association Web page. If you call FHA, we are probably going to be the lender that they refer you to." Both representatives work for Quicken Loans Inc. A few hours later, a spokeswoman for the Detroit lender, Paula Silver, said it "complies with all applicable laws" and that "we have contacted our advertising partner and have ended our participation with this website."
