One of the important reasons is that it tolerates dishonest mortgage lending scum like American Benefit Mortgage, Inc., whose President is Timothy David Bullard of California. The incumbent Republican Attorney General, John Suthers, noted in late 2005 that:
Earlier this year, the FBI identified Colorado as one of the top ten mortgage fraud "hot spots" in the country.
The polite name for companies like American Benefit Mortgage, Inc. is "subprime mortgage lender", which is how the federal department of Housing and Urban Development classifies them. But, while most, if not all, dishonest mortgage lending scum, are indeed subprime lenders, this fails to capture the other important element that makes one eligible for this distinction, which is their shady marketing practices.
Google them and you will find dozens of pages of mortgage lending spam sites.
Dig deep enough and you will discover that they have marketed themselves via fax.com, a notorious junk fax purveyor, that is now buried under suits from state attorneys general, the FCC (Federal Communication Commission), and multimillion dollar judgments for their illegal practices, who just happened to have their offices right around the corner from American Benefit Mortgage, Inc.
And then, there is the junk mail from them that I received today.
Deceptive Implication of Government Affiliation
On the front it states "Form: GV8774-06", and "Property Owner(s) On Record - Certified Address", and "Warning: $2,000 Fine or 5 years in imprisonment or both for any person interfering or obstructing with delivery of this letter U.S. Mail TTT.18 SEC. 1702 U.S. Code"
Open it and it says, next to an "Equal Housing Lender" logo:
Owner of Record: Important Mortgage Notice. Financial Records indicate that you have a government regulated loan. We are pleased to inform you that the financial institution listed below is qualified to offer you a reduced payment option on your mortgage. . . . Be advised that as a recipient of a loan from a Government approved institution, you are eligible to receive a $48,223 CASH ADVANCE. In addition, the authorized financial institution listed above offers [more offers] This will be the last chance you get to take advantage of one of these special offers. rates are going up. Call today!
Three lines into the fine print at the bottom of the page, however, it notes that:
This product or service has not been approved or endorsed by any government agency and this offer is not being made by any agency of the government.
Implying one thing, and then saying something else in the fine print, is a hallmark of dishonesty.
Deceptive Rate Offers and Eligibilty Statements
Their junk mail is on one of those envelopes with ink on the back of the front page that can be typed through but not seen from the outside. Usually, the inside of the front page is purely ink and immediately discarded. In this piece of junk mail, however, there is a disclaimer at the bottom of the inside of this piece of the mailing, where there is usually only ink, in fine print.
The main page with text, below a box mentioning my current mortgage lender that says "Original Approved Lender", it says:
Loan Amount: [approximately the amount of my mortgage].
Program: 40 Yr Smart ARM
Rate - APR: 1.00% - 6.12%
New Monthly Payment: [approximately a third of my mortgage payment]
There are also reassurances about credit on the first page, some in big bold print, that include:
Lower Interest, Lower Payments.
No Points- No Fee Options.
May Be Tax Deductible.
Collections and Bankruptcies May Be OK.
Your Credit Does Not Need To Be Perfect To Qualify.
In the fine print on the back of the page that is usually discarded, however, it says:
The stated rate may change or not be available at the time you obtain your loan. Information was obtained from public record sources. We are not an affiliate of nor associated with nor endorsed by the original approved lender. Refinancing may increase the finance charge over the life of the loan. The 1% offer's [sic] start rate loan payments are based on a 30 year monthly adjustable first mortgage loan with an initial payment rate of 1%. This start rate is for the first 12 months. At the first year adjustment, the payment goes up to 71/2% per year and each year thereafter interest rate is at least 2.70% plus the current indiex. To qualify for the interest rates as quoted, a loan to appraisal value ratio of less than 80% may be required. Credit and other loan to value restrictions may apply. A current appraisal will be required. Maximum interest rate is 9.95%. Consult your financial advisor for tax benefits.
Got that? On the page you read, the interest rate is 1% to 6.12%, which is well within the range of conventional mortgages, and the payment is a third of what I am currently paying with a fixed rate, 30 year mortgage at a rate of under 6% per annum. But, in the disclaimer, you find out that the top rate is really 9.95%, and that your payment after one year will go from a third of the current payment, to two and a half times the current payment.
Oh, and you actually do have to have both decent credit and enough home equity to qualify for a conventional mortgage to get the deal that is advertised next to all the language about generous credit terms.
Hiding a disclaimer that actually contradicts your main text in a part of a letter that is usually discarded without being read, because it usually doesn't contain any text, is another hallmark of dishonesty.
Can you say dishonest mortgage lending scum?
I knew you could.
Is the scum in question still doing an active business in Colorado, apparently free of legal impediments?
Cross Posted at Colorado Confidential.