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?
Right Peter!
I am actually shocked that anyone has qualified under FHA Secure. To me, there was never any real intention to help any deliquent borrower. Why do I say this? Simple common sense. One of the qualifications is that a borrower not have any consumer lates. Who gets behind on their mortgage but pays their Sears card on time? Gimme a break. The Hope Now program has some similar “loopholes”. Both are just meat to protect the image of banks and investor interest.
I had a client approved under this program then the investor shut down! I was able to fund it with FHA but not using the secure program
I am puzzled? Since when has anybody thought that the government would tell the truth?
FHA is shameful to report the grossly overestimated numbers of borrowers that have been helped by their “Secure” loan, but to say FHA is practicing bait-n-switch is board line incompetent. There are no other products FHA would have to offer a delinquent borrower. The major hurdle that most borrowers trying to obtain a FHA Secure loan have is proving the ability to repay the loan (debts/income). Our government would need to implement the FHA “Sure you make $100k a year” Secure loan to have any major impact on our problems. Inflated home values, stagnant middle class income and teaser mortgages are too big of problem for FHA to solve.
Regarding comment about FHA wanting to do “ol bait and switch”. FHA does not have another mortgage option for people behind on their mortgage payments. The numbers used by FHA could have been the total of all their refinances including reverse mortgages. The FHA reform bill S2338 just passed in the Senate 93 to 1. Could those numbers have been used to help the Senate pass this reform. Many of the Senators spoke of the need to help the subprime borrower. One important part of the bill is the new loan limits. The House/Senate conference committee still has to compromise on the new loan limit. It could be between $417,000 to $750,000. This could dramatically help the FHASecure borrower. But again, FHA does not have an alternative option for the subprime borrower who it behind in payments.
You busted them, I just knew those numbers quoted were a train full of cowcrap…so it seems like even more lgov sponsored propoganda, when will we take our country back?
While I agree that the FHA Secure program is far from the answer to every sub-prime problem I would like to remind everyone that we don’t really want FHA buying loans that will ultimately end in default. Secondly, I agree that the program is over hyped and that HUD should not be making unsubstantiated claims to cover FHA shortcomings but it is not “bait and switch”.
Bait and switch implies that one product is advertised in order to steer the consumer to another product with a higher profit margin and therefore not the case with FHA Secure. Lets not forget that FHA Secure IS the higher priced option not the loss leader, and at the risk of sounding like I’m defending FHA, it’s the Lenders who have only just recently “rolled out” the new guidelines.
My guess is that even if the “Secure “ guidelines weren’t so hopelessly tight we still would have a supply chain problem. Over 60% of the loans closed nationally are closed by the same Mortgage Brokers that everyone has seen fit to vilify as of late and most of them are not set up to do FHA loans.
Either way Secure is crap, how does FHA justify buying a loan from a borrower with Fico’s in the low or even sub 500’s or a DTI over 60% but they wont take a loan from borrower who, up until the reset, made every payment in their life on time but now has a DTI in the high forties. Yet another fine example of how woefully ill-equipped our elected officials are when it comes to “solving” this problem that they created.
Its a lot of BS in my personal (yet highly accurate) opinion.
Fine by me. The fewer bailouts the better.
Once upon a time there was a magical kingdom where people lived and worked and saved, far out producing every kingdom in the land. One day a sly old man came and said to the king “ what right do your people have to be so prosperous when there are so many that go without in other lands?”
The King answered the kindly old sole “ the people in this place are free to choose what they do with their time and their money and we believe that all people everywhere can prosper as we do if they will assert their God given rights of life, liberty and the pursuit of happiness”
Well the crafty old man was wicked hating the idea of a government chosen by the people and knew that this place would not be taken by force because everyone who lived in the land owned a gun or two and if need be would defend their country with a well armed militia of over 200 million soldiers.
So one day the old man went to work sending merchants to the magical kingdom to sell to the people their goods but instructed the merchants “ sell your goods but bring nothing out of the land except gold and silver”.
Then the old man sent scholars to open collages to train the teachers of future generations but instructed the Scholars “train the teachers in a way that will destroy the core values of the family so that future generations will be unable to tell right from wrong” “this is important” he said “ the future generations must believe that there is no God” “ If they believe that their rights are given to them by the government rather than given by God then they will not fight when their rights are taken from them in the future”
After a good long while the old mans treachery started to work its way into the fabric of the thoughts and behaviors of the people living in the magical kingdom. The people no longer saved money, instead they would borrow from evil merchants who would happily lend for a small 18% yearly fee. The people had been taught in school that because they lived in a free country that meant they had to tolerate all things even if those things were wicked. All things were tolerated except any mention of God of course, all references to God were eliminated from public view, in all fairness there were some who were offended by the very mention of God and well after all Tolerance is a virtue…..Isn’t it?
The old mans plan would soon be done, good had become evil and evil had become good all that was left was to somehow get the people of the magical kingdom to willingly borrow more money, secured by their homes, than they could ever hope to repay and then at just the right moment he would stop lending to them. All the wealth of the kingdom would be gone and the people would have become his willing slaves working 10-12 hours a day to keep paying their loans in hopes that he would continue to lend so that they could continue to buy, trying to fill the hole in their hearts that was left when they threw God out.
The kingdom was nearly destroyed soon the people would give up all of their God given rights for a “cold roll in a cage”
To be continued…
Linda- I hate to break it to you but there has been not a single bailout of a homeowner yet, no not one. The bailouts are for the banks only not for the homeowners. Havent you been paying attention NOBODY QUALIFIES TO BE BAILED OUT its a pretty neat trick really. They keep you looking at their right hand while their left is flushing money down the crapper. OMGWTFBBQ do you believe everything you hear people say. Good grief I hope your at least good looking.
CTAN- Per the FTC:
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.
They key here is “usually”.
The issue I have with this advertsising is atht they are clearly stateing that they have refinanced 40,000 plus homes with the FHASecure and tha there are another 20,000 FHASecure loans in the pipe and they even go as far to say, “Thousands Have Switched to FHASecure to Keep Their Homes – Why Not You?
Misleading? well yes…….
Wait here is more: 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.
Deceptive, well yes!
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.
I believe they are using the FHASecure as bait and switching them to other FHA products.
Like I said, FHA and HUD are great agencies and they do a tremendous amount of good, but shouldn’t they abide by the same rules that govern everyone else and especially when it is as sensitive of an issue as keeping homeowners in their homes?
I stand corrected; I guess I just don’t feel as though it is FHA’s intention to bait borrowers into getting an automated FHA product by dangling FHA secure. FHA Secure is
1. Higher interest rate
2. Manually underwritten
3. Not at all liked by underwriters as they still must put their “Seal of approval” on it so to speak and HUD has never said that underwriters would be held harmless from the “Secure” approvals that have gone bad.
Even the FHA Mortgage Letter states that an attempt should be made to get a “Score Card” accept before trying to underwrite “Secure”. Maybe you’re right, as I type I feel like I’m further proving your point.
However I still think that the attempt to defraud here is really our “Fearless Leaders” wanting to look as if they are not completely impotent when it comes to being able to stem the tide of the looming foreclosures.
We were trying to refinance the home. Countrywide mortgage took us thru a series of nothingness. Since Oct 2007 to Dec 19 2007 they said they were trying to help us. Well the housing market kept going down…
Dec 12th they put us in for FHA they did a new appraisal and now they said your house has dropped in value too low. Now they can’t refinance.
We paid 400 to get an appraisal in Nov 2007 and it was approval and they did not go thru with it. It seems they wanted us to not be able to refinance. Now we have to try to get a loan modification with our lender…. We thought we were preplanning and handling this situation.
Moe,
Out of curiosity, significant portion of bait & switch, well is “switch”. Just what product FHA is switching them into ? You see, that’s not a bait and switch because these folks are too deep into debt hole. If there is no product to help these people that’s not bait & switch, because there is no switching going on at all. Get your terminology straight.
Alan, it definitely appears they are making false claims. I have more than backed up my claims and you will still find something to pick at me with. Did you folllow all this blue links? Well, those are links to my claims and they speak for themselves.
Most homeowners have no idea what the FHA Secure is, but a fancy new name that is boasted as saving 40,000 homeowners. They are baiting them on false claims and the fact that most homeowners are completely to what the FHASecure is and what it will do for them.
And directly from the FHA website they say they are saving thousands with the FHASECURE and that 40,000 have been helped with the FHA Secure.
They should fix it and make a public apology because it is wrong to make those claims when millions are at risk of losing their home and this is serious issue for consumers.
Alan, GET YOUR TERMINOLOGY STRAIGHT!
No matter what you comment. I have won this debate hands down. Fold your cards, throw in the hand and have a Merry Christmas!
CTAN- They may not be baiting and switching, but they are definitely making false claims. Thanks for your thoughtful comments.
Yvonne – sorry to hear your stressful story. There are millions facing what you are. My heart goes out to you and keep fighting!
Wellitisntallbad – huh? haha
Someone is a moron- you are correct
Baiting means promising something and that stuffing into different loan. For example those teaser rate ads that imply fixed rate loan but in reality option arm bombs. FHASecure is not baiting them if borrower calls and denied it ain’t baiting since he/she is not being sold into another product. Borrower simply doesn’t qualify. Misinformation from HUD, sure. But baiting it ain’t.
Misinformation. that’s about all I can get from you…….I’ll live with that.
Does anyone have a referral for CO?
If so I would like to get in touch with someone to help in my situation
I can be reached at 303-241-3730
Thanks
You can visit http://www.naca.net or http://members.naca.net/findanattorney.php
Reply to Chief Justice Thomas Moyer More, help should be given to those who lost there House; I think lawyers defense strategies should, be two fold, with emphasis being not only on preemption, of foreclosure\’e2\’80\’99s upon Banks filing of Reformation of Mortgage (foreclosure); But also targeting the banks to recover realty under existing state laws, for people who were foreclosed on already [untapped clients]; pressure should be put on elected Judges to adjudicate and create jurisprudence from complaints filed under Ohio Revised Code \’c2\’a7 5303 (actions relating to realty), I don\’e2\’80\’99t see why predatory lending laws can be applicable nexus to 5303 to achieve recovery of realty, since a quiet title action can be brought be a person out of possession of realty having or claims to have an interest in reversion in realty, ( statue of limitations is 20 years ?) in other words a foreclosure action against the bank, lets take a caviler approach to it, the Banks have, think out of the box evil requires different innovative thinking, moreover, the nation is under attack from greedy citizens from within! \tab\tab\tab\tab\tab
Christopher Barksdale
I would like to know the names of some of these lawyers who are helping with forclosure issues.
Thank you,
Dear nita slaughter I’m not a lawyer, however, I am currently Representing myself pro se against Deutsche Bank Trust Company America, because it stole my mother\’e2\’80\’99s house, which would, have went to myself upon her death, this may seem hard to understand, but it did happen, as far as your question to me, I don\’e2\’80\’99t know any lawyers who have the balls to go up against these corrupt banks, who receive assistance from our elected Judges [collusion], although I certainly have sought counsel, but to no avail, I suggest you read at a Law Library as I have done and go for it, and if your African American, as I am keep trying, because your in for a uphill fight, because these banks targeted black neighborhoods first with sub prime loans, and if you challenge the outcome of a foreclosure, even with appropriate application of law the Judges will find a way to shoot you down, without the Banks assistance, I not trying to discourage anyone but this is what happen to me (fact) so hang in there and fight maybe someone will notice, but don\’e2\’80\’99t ever, ever, give up or in.
Chris,
This is ta sad but true reality of the problems facing consumers.There just are not enough or enough with balls to take on these bannks as you say.
Keep up the good fight!