Mortgage Lenders Permitted to Defraud
Major banks took full advantage of the housing boom, creating mortgage subsidiaries in an attempt to issue confusing adjustable mortgages and home equity line of credit loans to everyone.
Now, as the nation suffers from the fallout, many are starting to realize just how rampant fraud and deceit ran over the past few years.
Brandweek investigates:
In light of what many have termed America’s subprime mortgage crisis, the Federal Trade Commission has been keeping a close eye on mortgage companies’ advertising and marketing campaigns. Last month the FTC decided it had seen enough, and
warned more than 200 lenders about “potentially deceptive” mortgage advertisements that may give borrowers false impressions surrounding the cost of home loans. During a recent Morning Edition spot on National Public Radio, business reporter Jim Zarroli noted that over the past decade, the FTC has brought 21 actions against companies in the mortgage-lending industry, particularly in the subprime market. Several of these cases have resulted in large payouts from mortgage lenders, with courts collectively leveling more than $320 million in fines.
The FTC’s primary complaint? Many mortgage lenders have been hiding important loan terms and conditions in the fine print of advertisements. A Sept. 12, 2007 Associated Press article noted that experts on this issue believe that “this kind of advertising is one reason why consumers—particularly the elderly, minorities and the poor—signed up for subprime loans.”
And these are the companies which the nation is struggling to bailout? Something is definitely wrong with this picture.
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