Mortgage Advertising - It can be very deceptive - Be Very Careful

By
Real Estate Mortgage Broker with Social Media - Infinity Home Mortgage Company, Inc

 

mortgage advertising at times can be very deceptive

 

Why do many advertise. To make money, right?  You have to spend money to make money. But are some ads deceptive or misleading? You betcha.

What about the little giveaways or gimmicks offered when people advertise? Aren't they spending more money on top of the money that they are spending on their advertising? 

There is a very large company that does tax returns who also has a mortgage division advertising on t.v. now. If you close on a loan prior to December 31st, 2010, you will be entered into a contest. The winner will have their mortgage paid off up to $250,000. WOW....   In my opinion, it just shows that they make some decent money off of their clients. They have call centers set up, and in my opinion, many of the loan officers are just of average nature. Yes, bait and switch tactics are still used.

There is a lender in my local market that advertises and part of their ad states that they have the ability to close the fastest and most efficiently in the country because of a special system that they created. Okie Dokie - And that can be backed up how? Hey, you just give it a whirl kiddo and if it happens, it happens. If not, hope you have 2 + months on your hands.

 

 

 

~ TYPES OF MORTGAGE ADVERTISING ~  The numbers in parentheses are the number of search results when searching those exact terms that are highlighted on Google.

 

Best Interest Rates (14,400,000 search results) 

Lowest Interest rates Guaranteed (10,400,000)  - How to find those best interest rates -

10 day closing guaranteed (83,300,000) - you truly need to read the fine print on this one.

Call Now For a No Cost Mortgage (65,600,000)

Fastest closing (4,860,000) wow.. search this and be surprised.

Best rates available (102,000,000)

Honest mortgage lenders (155,000) - yes, you read this one correct. Sorry, but if you have to advertise this, I have a major problem with it.

 

Conclusion ?? - Just key words that many will search because that is what they are looking for. The best of the best. What did your honest grandma tell you? If it's to good to be true, then it usually is.

 

 

Here is an ad found on the internet

 

 

false and misleading mortgage advertising

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

What is unique about this advertisement? It is not an actual mortgage company, but a company that sets you up with other lenders on their approved lenders list. Where lenders have to pay a monthly advertising fee to get these leads.  What about that one that we have seen advertised for over a decade... Something Tree? Lending something?  Just search Lending and they pop up first. Same set up.

My point about this particular ad? This company doesn't haven't to comply with normal advertising rules and laws for mortgage companies, because this company doesn't directly lend. Yes, very sad in deed. So what is wrong with this ad?

  • The rate advertised, you don't know if it's a fixed rate or arm unless you read the fine print. It states that it's a 5/1 arm.
  • The adjusted payment that they give you is incorrect, it's not the worse case scenario. That payment should be anywhere from $100 to $200 higher. Why is my range so broad?  Because we don't know if it's a FHA loan or a conventional loan. Why does that matter? The caps are different on each type of loan. Meaning, the maximum adjustment for that rate after 5 years are up.
  • No hidden fees and just low rates. hhhmmm Just attention grabbers. Makes you feel all warm, fuzzy, and safe, right?
  • Endorsements - Ah, one of my favorite topics. Look who is endorsing this particular company. MSNBC, CNN Money, and the Wall Street Journal. All places that are highly respected and known. Gee, my local NBC affiliate endorses the company that I tried mentioning above, who I told you to search by the first word "Lending". I worked for a company, who had a division that I didn't work for, who used them. You had to bait and switch the rates and fees just to be competitive.  Even though certain laws have changed in the last year, this can still be done. So many loop holes.

 

 

Summary :  When shopping for mortgages, you just need to be very very careful. I could tell you hundreds of stories, all based on my knowledge of how the mortgage industry operates and based on my opinions. But just beware of many different red flags. We all want your business. Key factor : We all get our money basically from the same place, Wall Street. Meaning, most rates are very close. Those promised best offers? You do the math... and this goes for real estate ads and such...

 

 

Below are some great posts concerning different types of advertising and methods.

 

Shopping for mortgages - The Public Image of Advertising that is misleading !!!! - Part 1 of 2

Advertisements - Is the grass greener on the other side?

How does one advertise? Is it misleading? Important things to beware of !!! Part 1 of 2

The no cost mortgage myth - by Ken Cook -

Shopping for mortgages - It's not like shopping for cars - This post has two good mortgage stories

Shopping for mortgage interest rates - A great post explaining to you on what to look for. The main point, find out what your lock terms and policies are before you go with the lender and not after... such as a potential client of mine did. Finding out 3 days later that he couldn't lock in until the appraisal was done. Rut row..

 

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For more information on FHA loans, please go to this link. The FHA Expert

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!

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For information about FHA myths & FHA rumors, please read : FHA Myths & Rumors

 

Copyright © 2011 by Jeff Belonger of Infinity Home Mortgage Company, Inc

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Topic:
Lending / Financial
Location:
New Jersey Gloucester County Deptford
Groups:
1st Time Buyers
All About Mortgages/Mortgage Networking
Mortgages
Realtors®
The Art Of Marketing You
Tags:
mortgage advertising
misleading mortgage advertising
false mortgage advertising
misinformation with mortgages
shopping for mortgages

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Rainmaker
164,839
Melissa Juarez
Massachusetts Buyers Broker Agency, LLC

Jeff, as always a solid explanation of what's out there. It is sometimes a minefield for prospective buyers. 

October 09, 2010 08:30 AM
Ambassador
436,773
Paul McFadden
Mortgage Loan Officer, Bellevue Washington Home Lo
Alaska USA Federal Credit Union

Jeff: It's funny how most of the public knows this stuff yet often falls for it anyway. I'm thankful that my clients are a little sharper than most. They seem to go for the trust factor and we all know that advertising isn't a very trusted medium! Thanks for the post.

October 09, 2010 09:55 AM
Rainer
75,287
Steve McCoole
Mortgage Alliance Group - San Diego, CA - NMLS#305667

One of the ones I love is a radio ad from a Mortgage Banker in the L.A. area whose slogan is "It's our money and our rules".  The implication of course being that they can make loans in situations that others can't.  

HaHa, THEIR money is a warehouse line that they need to get that loan off of ASAP and their rules are going to be overlay after overlay on top of the agency guidelines.

October 09, 2010 10:07 AM
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738,141
Jeff Belonger
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans
Social Media - Infinity Home Mortgage Company, Inc

 

I just wanted to thank everyone for the comments and for the polite compliments... I will try and get back to everyone later...  thanks

October 09, 2010 10:08 AM
Rainmaker
1,684,372
Gabe Sanders
Stuart Florida Real Estate
Martin County Residential Homes, Condos and Land Sales

We try to warn our customers about these bogus 'great deals' and most often they listen.  A few occasionally get burned looking for that wonderful deal that doesn't exist.

October 10, 2010 07:41 AM
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I just want to educate people about mortgages and the process. In regards to lending, I am very creative, intuitive, honest, and one who communicates information, may it be good or bad. I am a loan officer that looks out for your best interest.