Mortgage Ads Send Mixed Messages
Dozens of mortgage lenders have shut down their subprime operations, but you wouldn’t know it from Internet and television advertising where lenders are declaring, "Bad Credit? Call Today!”
"It's been a common feature of advertising," says Allen Fishbein, director of housing and credit policy at the Consumer Federation of America. "They offer their products not around interest rates but among monthly payments, ease of access, among 'you're more likely to get a yes with us than with others.' I don't think that has changed in this environment."
Lenders are defending themselves. "It's important to point out that there are loan options available for borrowers with lower credit scores in today's market," Darren Beck, senior vice president of marketing for LendingTree.com, told the Boston Globe.
While there's nothing wrong with lending money to people with bad credit, government officials are concerned about independent mortgage brokers who try to trick people into purchasing properties they can't really afford, says David Nahmias, U.S. attorney for the Northern District of Georgia, who has worked on mortgage fraud cases.
The Federal Trade Commission continues to investigate any cases of lending institutions misleading people with their mortgage-related advertising, says Peggy Twohig, associate director for the division of financial practices at the agency. "It depends on exactly what they say, how they say it, how big and bold things are titled, and what is said in the small print,” she notes.
Source: Boston Globe, Nancy Trejos (08/25/07)