The Feds Step In – about two years too late

By: Spencer Rascoff, COO | September 14, 2007

You’ve seen the ads – on the Internet, in the newspaper, and cluttering up your mailbox: “No money down – no documentation, we help you buy houses, easy credit!” This type of easy money characterized the lending climate for the last 5 years, and now we’re paying the price.

Well the watchdog of advertising messages is now stepping in, several years too late. The Federal Trade Commission warned more than 200 companies to stop “potentially deceptive” advertising for mortgage products. Uncle Sam, where were you a few years ago when people were buying houses they couldn’t afford and were taking out loans they never should have been offered the terms of which they didn’t understand?

Don’t get me wrong - at Zillow, we love ads for mortgage products. But truth in advertising is important, especially when it comes to something as important as a mortgage.

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Categories: Advertising, Home Mortgage

Comments

3 Comments so far

Geoff on September 15, 2007 4:02 pm

In all fairness, I don’t recall seeing the housing industry (or consumer advocacy groups) calling for the Feds to take any action on this issue several years ago. Regardless, “He that gives up liberty for safety, deserves neither.” Certainly truth in advertising is important, but lots of folks made this bed and lots of folks are (sadly) going to have to sleep in it.
Spencer on September 17, 2007 10:14 pm

Some really interesting stats from Fortune Magazine:
- $571 billion is the value of adjustable rate home mortgages that will reset from a low fixed rate to a higher variable rate btwn now and end 08

- Americans will pay an extra $42b in mortgage payments next year

- $1,018 avg increase in monthly payments from reset mortgages
Paranam on November 1, 2008 3:50 pm

Congress has passed many laws to protect consumers, such as the TILA, HMDA, RESPA, HOEPA, AD NAUSEAM …etc. They are “feel good laws”, but do not work. Why? Politicians pass them to “look good” to the voters, “See—I am doing something for you”. Then they fail to fund the agencies who are supposed to enforce these laws. A citizen who is cheated and wants to make a complaint will find it hard to find out where to file it. If h/she figures it out, nothing meaningful happens. Evidently there is a huge federal garbage can for storing complaints. Of course, the citizen can file a federal lawsuit—if h/she is rich. Even then, most courts will throw it out because h’she “doesn’t have standing”. Will this ever change? I doubt it. So, get educated, Google everything, be suspicious of everyone, read what you sign very carefully and cross your fingers. For those who do not want to go to all this trouble, look in the mirror. If you see a sheep looking back at you, say Baaaah, you were born to be shorn. Sorry. Paranam