FTC gives warning about mortgage ads
By The Associated Press
The Federal Trade Commission has warned more than 200 companies about “potentially deceptive” mortgage advertisements that could give borrowers a false impression of home loan costs.
The FTC declined to make available a list of mortgage brokers, lenders and media outlets warned because the commission has not concluded the companies are breaking the law.
Some ads, the FTC said, highlighted mortgage rates as low as 1 percent, but didn’t inform consumers they often apply for a short period and can rise.
Experts say this kind of advertising is one reason consumers — particularly the elderly, minorities and the poor — signed up for subprime loans given to borrowers with weak credit.
While some people were betting they could refinance their loans before the rates reset, others were not informed adequately of the risks, experts say.
Lucy Morris, a senior FTC consumer protection attorney, said disclosures of mortgage terms have to be clear. “It’s not enough to bury important information in unreadable fine print.”