What is UDAAP?
If you have ever been involved in the housing market, you may have heard about UDAAP.
UDAAP stands for unfair, deceptive, or abusive acts and practices. The Consumer Financial Protection Bureau (CFPB) closely monitors and regulates the housing and lending industries to ensure all practices, advertisements, and actions by a financial institution do not inflict financial injury on consumers.
Why is this necessary? The housing industry can be confusing and stressful due to frequent fluctuations in the market. It is imperative that all disclosures and means of communication with the consumer are clear, concise, and accurate. Any indication that an advertisement or documents can be considered misleading or steering a borrower to a particular decision without all of the facts is grounds for severe punishment.
There are a variety of situations throughout the loan process that can be considered unfair, deceptive, or abusive. From offering loan terms that are not available to indicating that a specific interest rate can be associated with a certain loan product, a lender is responsible for the information it distributes to the public. Whether the information was intentionally misleading or not, all communication that is public facing must be 100% on the up-and-up. Consumers need to be presented with the details needed to make an informed and educated decision. Anything that can be considered misleading or false is strictly prohibited.
Talk to your Realtor and mortgage professional to learn more about how to read lending advertisements, or have them clear up any confusion for you.