They may be listening to your phone calls, reading your e-mails and peeking into your shoes at the airport, but the Feds apparently never listened to the radio. Well, they just tuned in and heard something they didn’t like. Yesterday the FTC issued a warning to lenders claiming those ridiculously low interest rate programs. You know the one where the guy says stuff like: “Rates just fell to 1.25%, you could save thousands” and the like.
I wonder when the Fed’s will get on the Internet and see the low mortgage rate ads, which shows a $400 payment for a $500,000 mortgage with no corresponding APR disclosure? Or, something like that.
Here is an excerpt from the FTC statement issued yesterday:
The Federal Trade Commission is warning mortgage brokers and lenders, and media outlets that carry their advertisements for home mortgages, that some of the advertising claims currently appearing in Web sites, newspapers, magazines, direct mail, and unsolicited e-mail and faxes may violate federal law.
“Many mortgage advertisers are making potentially deceptive claims about incredibly low rates and payments, without telling consumers the whole story – for example, that these low rates and payments apply for a short period only and can go up substantially after the loan’s introductory period,†said Lydia Parnes, Director of the FTC’s Bureau of Consumer Protection. “Home ownership is the American dream, but it can become a nightmare for consumers who don’t have the information they need to understand the terms of their mortgage.â€
Read the full statement here.