By Moe Bedard
“Thousands Have Switched to FHASecure to Keep Their Homes – Why Not You?” – FHA Website
“only 266 such borrowers have cleared all FHA hurdles, according to data compiled by the Department of Housing and Urban Development that was provided to Reuters” – Reuters
“In only the first 4 months of FHASecure, more than 40,000 households have refinanced under the new housing insurance program to protect their families’ investment in the American Dream.” – FHA Website
“Here’s the truth: FHA Secure has received about 3,000 applications from homeowners who are delinquent on their loans and has closed on about 600 since September, that answer from an official HUD staffer who gave me the actual numbers after more than one request.” – Diana Olick
“More good news is that an additional 20,000 are in the pipeline and their approval is expected by the end of December. That will mean that in the first 4 months of the program, FHASecure will have helped 53,000 families and received more than 127,000 refinance applications from families whose loans are current or past due.” FHA Website
“To tell you the truth, we have seen only about a 1,000 delinquent borrowers, but that’s a good thing.” – Meg Burns Director of FHA Single Family Development Program
Is FHA just hyping the FHASecure so they can do the ol bait and switch?
It appears that they are blatantly advertising the FHASecure as a loan that has helped more people then it clearly has in order to entice Americans to inquire about the FHASecure Loan so they can then switch them to other FHA mortgage products.
This is in clear violation of the FTC Truth in Advertising laws that protects consumers against false and misleading advertising.
From the Federal Trade Commission (FTC) website;
Bait and Switch
How does the FTC define “bait and switch” advertising?
It’s illegal to advertise a product when the company has no intention of selling that item, but instead plans to sell a consumer something else, usually at a higher price. For more information, ask the FTC for its Guides Against Bait Advertising.
In only the first 4 months of FHASecure, more than 40,000 households have refinanced under the new housing insurance program to protect their families’ investment in the American Dream.
This is directly from the FHA website and FHA is clearly stating that they have refinanced more than 40,000 households under the “new” housing insurance program that they have clearly marked in bold, type face writing, FHASecure.
If you type into Google, FHA Secure, the FHA website is #1 on page 1 of the search results that advertise the above claims. Thus, many consumers are happening upon the FHA website and obtaining FALSE and MISLEADING advertising by the Federal Housing Administration (FHA) that is part of the Department of Housing and Urban Development’s (HUD).
Truth in Advertising from the Federal Trade Commission (FTC);
What truth-in-advertising rules apply to advertisers?
Under the Federal Trade Commission Act:
- Advertising must be truthful and non-deceptive;
- Advertisers must have evidence to back up their claims; and
- Advertisements cannot be unfair.
More from the FHA Website;
More good news is that an additional 20,000 are in the pipeline and their approval is expected by the end of December. That will mean that in the first 4 months of the program, FHASecure will have helped 53,000 families and received more than 127,000 refinance applications from families whose loans are current or past due.
They are clearly stating that the FHASecure will have helped 53,000 families in the first 4 months of the program. A statement that the FHA Director, Meg Burns says is more like a 1,000.
More from the FTC;
How does the FTC determine if an ad is deceptive?
A typical inquiry follows these steps:
The FTC looks at the ad from the point of view of the “reasonable consumer” – the typical person looking at the ad. Rather than focusing on certain words, the FTC looks at the ad in context – words, phrases, and pictures -ÿto determine what it conveys to consumers.
The FTC looks at both “express” and “implied” claims. An express claim is literally made in the ad. For example, “ABC Mouthwash prevents colds” is an express claim that the product will prevent colds. An implied claim is one made indirectly or by inference. “ABC Mouthwash kills the germs that cause colds” contains an implied claim that the product will prevent colds. Although the ad doesn’t literally say that the product prevents colds, it would be reasonable for a consumer to conclude from the statement “kills the germs that cause colds” that the product will prevent colds. Under the law, advertisers must have proof to back up express and implied claims that consumers take from an ad.
The data that Peter G. Miller forwarded to me that was directly from HUD clearly proves that they do not have the proof to make the claims they are advertising to struggling homeowners.
More from FHA;
HUD’s Federal Housing Administration (FHA) is on target to insure more than a quarter of a million FHASecurehome loans in Fiscal Year 2008, further evidence of FHA’s commitment to homeownership and helping people safeguard their investment in the American Dream.
More Truth in Advertising from the FTC;
What makes an advertisement deceptive?
According to the FTC’s Deception Policy Statement, an ad is deceptive if it contains a statement – or omits information – that:
- Is likely to mislead consumers acting reasonably under the circumstances; and
- Is “material” – that is, important to a consumer’s decision to buy or use the product.
Wait, how is 600 translated into 35,000??? I know the President is prone to grammatical errors, but not usually numerical ones. (I’ll also add that another reporter was given the number 266, reportedly by HUD as well).
It seems that at some point this fall, the folks at HUD or FHA or somewhere decided to pool all loans made by the FHA under the “FHA Secure” umbrella. A rose, by any other name. So yes, since September, the FHA has backed 35,000 loans, the vast majority of which were in no danger of default, but were just normal loans, and that’s pretty close to a normal three-month period.
Let me get this straight. HUD or FHA just decided to deceive people by placing all FHA origination’s and closed loans under the FHA Secure umbrella for reporting reasons? Isn’t that lying, trickery or deceit?
I have nothing against FHA and HUD.
This is a great federally ran agency that has done in that past and continues to accomplish a tremendous amount of good for the American people. I just can’t understand that what appears to be blatant misleading claims and press releases are not being corrected and explained.
Making claims like they are saving thousands of homes with the FHASecure. That’s what I have a huge problem with.
The only explanation I have is that they either made a huge mistake or they are lying and deceiving the media and American people for the sole purpose of more FHA mortgage applications.
In the Bloomberg interview, Burns admits that the number of applications under the FHASecure program from delinquent borrower is “quite low” — somewhere around 1,000. But she asserts that the program is designed to help “at-risk” borrowers, not just those who are delinquent.
You might not have noticed the sleight of hand at work there, so let’s make it clear: the FHASecure program was originally positioned as a way out for troubled subprime borrowers facing an imminent reset, or those having already been dealt a reset. It was supposed to be a program that would primarily help 240,000 delinquent subprime borrowers hit hard by resets avoid foreclosure.
Peter G. Miller of FHALoanPros.com;
President Bush, HUD Secretary Jackson and Secretary of the Treasury Paulson all provided big estimates to support the FHASecure program and all are now presumably embarrassed by the realities of the HUD effort. If they are embarrassed — if they have any sense of compassion for the people nationwide who are losing their homes — they will want to get to the bottom of the FHASecure debacle as much as anyone.
Let’s be very clear about this: The FHASecure program was supposed to be a way that borrowers could refinance existing toxic loans and save homes from foreclosure. That’s it.
If HUD can turn 266 loans, or 155 loans, or 600 loans into 33,000 loans and claim success, then how do we know that any numbers or any information from HUD is accurate or believable?
HUD owes the public an explanation. HUD must tell the public how many borrowers with toxic loans have been saved from foreclosure under the FHASecure program. Saving people from foreclosure was the promise and the purpose of the FHASecure program.
No doubt Mr. Bush, Mr. Jackson and Mr. Paulson would also like a straight answer. Right?