The Federal Trade Commission today issued letters to more than 200 mortgage brokers, lenders and media outlets warning them the ads they are running are "potentially deceptive" or may violate federal law such as the Truth in Lending Act.
The agency said some of the ads failed to disclose important terms and conditions that could make the loan far more expensive than the costs touted in the advertisements. These include not adequately disclosing how short introductory teaser payments would be, potential payment increases and other matters, such as the annual percentage rate, which is used to help consumers shop around.
"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,” Lydia Parnes, Director of the FTC’s Bureau of Consumer Protection, said in a statement today.
The FTC has also developed a consumer alert advising mortgage shoppers about potential pitfalls in mortgage advertisements.
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