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Buyer beware – Potentially deceptive mortgage ads are targeting veterans and older Americans


Today, along with the Federal Trade Commission (FTC), our Office of Enforcement sent letters to a number of lenders concerning potential violations of the Mortgage Acts and Practices – Advertising (MAP) Rule, a new rule that took effect in August 2011. The MAP Rule addresses claims and statements in mortgage advertising that may be misleading to consumers.

Many of these potentially misleading practices seem to be directed at older Americans and servicemembers/veterans. So today we are writing jointly to highlight things to be on the lookout for when you get mortgage advertisements. We have seen examples of the following potentially misleading practices through our complaint system, and also heard about them as we travel the country talking to consumers.

Be suspicious of ads with:

  • Official-looking seals or logos that imply some kind of government status, for example making you think they come from the VA or HUD. Although government agencies do guarantee some loans, they are not involved in the actual lending or advertising of loans.
  • Promises of amazingly low rates – which may turn out in the fine print only be in effect for a short period and then will readjust to a higher amount.
  • Promises that a reverse mortgage will let you stay in your home payment-free. Typically borrowers with reverse mortgages still have to keep up with tax and insurance payments – and will most likely lose their homes if they don’t.
  • Announcements of “pre-approval” and large amounts of cash or credit available to you. Typically there’s no guarantee that you will be approved for a loan, or the size of the loan, until you go through a standard qualification process.

You know the old saying: “If it sounds too good to be true, it probably is.” Some advertisers will use your military or veteran status as a way to approach you, promising special deals or implying VA approval. Others will use the lure of a “no-payment” reverse mortgage to troll for older Americans desperate to find a way to stay in their home when they can no longer afford a mortgage payment. And although mortgage rates are very low right now, an offer promising “historically low rates” may still have hidden traps that turn it into a bad deal.

So please, be cautious. If you get an ad that sounds a little (or a lot) too good to be true, you should get more information from a trusted source before you respond to the offer. The FTC has published a consumer alert on deceptive mortgage ads and what to look for. We also have more information about mortgages and other financial products on our website at Ask CFPB, as well as specific information for veterans and older Americans. Take the time to know before you owe!

  • GuvGuy

    It is about time people like and the folks who use a HUD or VA looking seal took a hit. But their web site is still up? I didn’t see anything about the greatest offense which is companies sending out official looking solicitations that say, “Important information about your mortgage” and then pretend to be associated with their servicer.

  • Maria Arroyo

    I’m so happy that this is finally being addressed. Many of the loan brokers who hawk VA loans are indeed agressive and misleading. Companies continue to flood my mail box just because I have a VA loan, even though I’ve opted out of unsolicited loan offers several times. Many try to trick people out of a good fixed rate loan for a super low adjustible rate that will go way up and that will force many vets out of their homes. Really there’s a special place in hell for crooks who cheat vets and elderly people out of their homes. Maybe a law with some jail time and major fines could help curb this.

    • Anonymous

      Actually there are legitimate companies that provide Streamline Refinance Mortgages to veterans that have been in business for decades. What the southern and western state veterans have to be concerned about? Since alot of areas are upside down, with the sales prices (from foreclosures) less than the mortgage amounts, most veterans can’t get VA loans.
      So some companies that are streamline and have a NO appraisal, NO income verification promise take a sector of the market (like California and Florida) where VA loans from full documentation loans would not be available to them, because of the APPRAISAL situation-and upside down mortgage problems from conventional loan foreclosures previously in the area.
      Remember, most VA loans are approved by the VA before closing. There is a two step approval process. Some people really need a lower interest rate, credit cards are high and job wages are not .

  • Meg

    Thank you! This is such important work. Shocking as it seems, there are businesses which seem to have a model of preying on profiting by duping military families, ranging gym memberships that cannot be cancelled even when deployed to terribly expensive deceptive mortgages. Keep up the great work!

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