The Mortgage Industry Is Still At It

Countrywide is the poster child for irresponsible lending. Their aggressive marketing tactics and lending money at any costs have created huge problems in the credit markets.

A listener sent out a marketing letter that he just received. They are marketing a 40 year fixed rate mortgage and inviting you to also take out cash from your home. So they want to set you up on a mortgage that lowers your payment as well as allows you take money out of your home equity. In other words, they are inviting you to fully mortgage your home to the hilt by taking out all of the equity possible and assuming a low payment that will ensure that it will take forever to pay down the loan.

Then there is a marketing piece from Wells Fargo. Wells Fargo advertises the advantages of using their services as follows:

· Take as much cash out of your home as possible
· Skip your first payment
· Lock in your rate at this low
· Then they show a low payment

The disturbing part of this advertisement is that they advertise a payment that is before fees. It is not based on the APR. Most people don’t understand the difference between the stated rate and the APR. In addition, this is an advertisement that would cover a jumbo loan. There is no way that a consumer could get the advertised rate for a jumbo loan.

At what point does Congress step in and protect us from ourselves and the sleight of hand marketing tactics of the mortgage industry? Granted, consumers are ultimately responsible for the decisions that they make. However, I think that it is the responsibility of Congress to pass regulation that prohibits this type of advertising.