UPDATE 1-Lawmakers urge FTC to halt deceptive mortgage ads

(Recasts; adds Parnes, Dorgan, McCaskill, Nelson, Blumenthal comments)

By Karey Wutkowski

WASHINGTON, April 29 (Reuters) - The Federal Trade Commission must take more aggressive action to stop deceptive advertising of subprime mortgages, which is still occurring even as growing numbers of borrowers face foreclosure, three Democratic lawmakers told the agency on Tuesday.

Lydia Parnes, director of the FTC's bureau of consumer protection, acknowledged that the agency needs to do more.

"We are bringing cases that we're investigating, but we obviously need to take it up a notch or two," Parnes told a Senate commerce subcommittee hearing. "For the past several months at the commission, we have certainly been questioning ourselves as to could we have done more and what can we do going forward."

Sen. Byron Dorgan, a Democrat from North Dakota, criticized the FTC for bringing just 22 actions against the mortgage industry during the past decade.

"I would hope this agency would take much, much more aggressive action," Dorgan said.

Some mortgage lenders are still using false or deceptive advertisements offering low interest rates to lure consumers, especially through online offers, Dorgan said.

The FTC is now investigating more than a dozen mortgage companies for possible deceptive advertising, Parnes said. She did not identify the companies.