When you see an advertisement to refinance your mortgage for “free”, it is most definitely a fraud. A mortgage lender will face $500,000 worth of penalties after deceiving clients with false ads.
“An ad that says you can refinance your mortgage for free is clearly deceptive if you have to pay money at some point before you sign on the dotted line,” Director of the Federal Trade Commission Bureau of Consumer Protection Jessica Rich said in a statement.
“Lead generators need to understand that federal laws governing truth in advertising apply to them as well as everybody else,” she added.
Importance of transparency
City Creek Mortgage, a trusted home mortgage company in Utah, noted the importance of transparency. The company explains that most companies hide the interest rate to attract clients, but they can always ask for full disclosure as part of their rights.
Transparency shifts the balance of power, whereby the client is empowered to see and make the best decision. From the perspective of a professional, transparency is an act of respect.
In case of a failure to provide transparency, you can sue the company like what the victims of Delta Prime Refinance did. They filed a complaint against the company for falsely claiming that there were no hidden charges and the mortgage refinancing is free.
The company faces three violations, namely the Federal Trade Commission Act, the Mortgage Acts and Practices Advertising Rule, or “MAP” Rule and Regulation N, and the Truth in Lending Act and Regulation Z. Aside from the monetary fine, the court does not allow the Colorado-based company to disclose, sell or transfer the consumer data they obtained.
The Department of Justice proposed consent decree on behalf of the Commission in U.S. District Court. The proposed consent decree is still subject to court approval.
The incident is not new; many companies make false promises. This is why it is up to you to make that important decision. Before working with a mortgage company, take the time to go over every detail. Be sure to work with trusted and respected mortgage company that offers transparency to ensure your future.