Mortgage ads without credibility: “ZIP. ZERO. NADA.”
If you’re looking for a mortgage, ads for “$0 money down” may be tempting. But if they hide fees or don’t disclose the true terms of the deal, they’re misleading, and they violate the law. In fact, the FTC recently settled charges with a Pennsylvania homebuilder that deceived consumers with ads for low-cost mortgages that hid fees and didn’t disclose vital information about the true cost of the mortgages.
Heritage Homes Group ads deceptively said homes were available for “ZIP, ZERO, NADA” “$0 money down” and “$0 paid for closing costs.” In fact, the program required payment of a minimum $2,000 deposit, a 2% funding fee, an annual fee and other charges. Some ads promoted a specific monthly payment amount, but didn’t reveal the restrictions on who could qualify for that amount or fees involved. The ads also failed to disclose, or clearly disclose, the annual percentage rate for the financing.
Under the settlement, Heritage Homes Group is barred from making further deceptive claims, among other terms. The settlement also imposes a $650,000 penalty on Heritage, which is suspended based on ability to pay.
When you shop for a mortgage, it’s important to understand all the terms and conditions of a proposed loan. You’ll want to compare all the costs involved in getting a mortgage and get information from several lenders or brokers. Use this worksheet to record the details. Certain buzzwords often appear in deceptive mortgage ads; if you hear about “super-low rates” or “no money down,” be ready to ask follow-up questions.