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Rules of the Department of Financial Institutions

SUBJECT: Misleading Mortgage Solicitations

DATE: September 23, 2002

The Department has recently received complaints from various lenders regarding written solicitations from mortgage brokers. These solicitations are sent to existing borrowers whose names are derived from public record searches. By identifying the borrower and their existing mortgagee, these solicitations often infer an affiliation between the mortgage broker sending the solicitation and the existing mortgagee. Such misrepresentation would constitute a violation of TCA § 45-13-115.

The purpose of this Bulletin is to put the industry on notice that the Department will vigorously enforce the prohibition in TCA § 45-13-115. Any licensee or registrant found sending these misleading solicitations will, at a minimum, be required to: i) notify the recipient of the solicitation that the solicitor is an independent mortgage company and is in no way affiliated with their existing mortgagee, and ii) explain how the solicitor obtained the identity of the borrower and their mortgagee.

The failure to take the corrective action described above could lead to administrative charges up to and including the suspension or revocation of the mortgage broker's license.