Deceptive Advertising Update: Linden Home Loans, Paramount Equity and Assurity Financial

Linden Home Loans received a “Statement of Charges” back in Dec of 2007  for a deceptive television and radio ad.  The Department of Financial Institutions discovered that Linden promised consumers residential mortgage loans at “1% interest, with no points and no fees,

48 thoughts on “Deceptive Advertising Update: Linden Home Loans, Paramount Equity and Assurity Financial

  1. It is good to see regulators finally stepping up to flush these place down the toilet. It is too bad they were asleep at the wheel when all the damage was being done. Most of these places will go out of business on their own as very few hit ’em hard boiler rooms are surviving since they have no real referral base.

    I have always maintained that the biggest spenders in this business are the worst offenders.

  2. Hi Russ,

    “very few hit ‘em hard boiler rooms are surviving since they have no real referral base”

    I taught a class a couple of weeks ago at a boiler room shop and I was talking with the LOs about working with Realtors. “Eww,” they said. “We never met a Realtor we liked.”

    Boiler room shops will survive. There are lots of different business models out there and one of them that’s proven to be very successful is to spend huge sums of money on radio advertising and hire LOs who are completely green/no nothing, and pay them at a very low rate, thereby establishing a basis for high staff turnover and a power imbalance that breeds the sort of problems we’re reading about at Paramount.

    The owners and management make lots of money and the bulk of the business is all refinances.

    Some boiler rooms are better than others. Some train their staff very well, but still pay a lower split.

    I have nothing against the boiler room business model because it’s just another form of doing business.

    It’s the deceptive advertising. We see this all across the United States, no matter what the business model.

    Deception leads consumers to mistrust an industry.

    Getting rid of these horrible ads will help the entire industry. But the state regulators can’t do it on their own.

    I firmly believe we must all help each other. Call your competitor on the phone and tell him/her that their company ad is deceptive and to pull the ad.

  3. Hi Q-diddy,

    My kids know both radio jingles. Paramount as well as “t-i-l-a…Tila mortgage dot coooommmmm!”

    I’ve been listening to too much Dave Ross and Luke Burbank in the car. Although that’s not necessarily a bad thing.

  4. Jillayne – Regarding post #3. A few management people from a “boiler room” company approached me about joining their organization as a LO/manager. Their whole operation was set up as a pyramid with the administrators and managers making the big money. I had no interest in working for a company based on an Amway model. Service to your customers wasn’t as important as making the numbers.

    They have since merged with another company. But, it is interesting to note how many of their LO’s ending up with denied licenses from DFI because they lied on their applications about prior misdemeanor and felony convictions.

    And Rhonda, it will be interesting to see what DFI does with Countrywide…. the Option Arms pushers that lurked on every corner (along with many others) enticing first time homebuyers with their teaser rates.


  5. I have commented repeatedly here, perhaps excessively, about deceptive advertising in the area.

    When I heard Linden’s ad last year, I flipped out, and called the radio station that carried the ad (105.3 FM), outlined specifically what was illegal, sent them the FTC’s booklet on how to advertise consumer credit, yet the ads continued. Since the station specifically states that it holds itself to a higher standard of advertising, I was immensely disappointed in their cavalier response.

    While Linden no longer advertises illegally (the Option Arm they advertised is no longer available in this state, and largely non-existent elsewhere), they still are able to originate loans.

    I guess we should be happy that at least some justice is served, and they must pay a fine.

    Paramount’s illegal advertising was less egregious, but possibly even more annoying. Claiming that certain fees are waived, only to tack them on somewhere else, and for continuing to mislead the public on the connection between prime rate and the 30 year fixed should have been enough to banish them forever, but they continue on air to this day.

    I worked for months to try and get the outrageously illegal misinformation in the Seattle Times Mortgage Rate Directory cleaned up, by reporting violations to DFI on a weekly basis, and I have to say that some progress was made. There are still obvious lies represented there (hello, but MI is counted as part of APR, and if you are quoting 95% financing, you are going to have MI of about 0.78 tacked on to the rate), but eventually, I grew tired of the battle, as it provided no gain to me.

    I had hoped that the other (legal and correct) advertisers would police the illegal advertisers there, since it was their dollars being wasted, but I do not see the evidence that it is happening.

    There are advertisers that choose not to advertise illegally or tout unavailable rates. I do not think I have ever heard an illegal ad from the ” One triple eight…. Bada Ba Dada da Boop” folks. So their jingle is annoying… it works for them.

    Listen, this stuff is going to keep popping up unless we make the media that carry the illegal advertising liable for the ads legality. Maybe triple the revenue they charge? At least then, they may consider the allegations of illegal advertising, instead of dismissing it outright.

    Hell, Google can afford it!

    Not that it will ever happen in my lifetime….

  6. Regarding Assurity, read the SOC.

    DFI repeatedly warned them to stop using deceptive mailings, yet they continued to do so.

    That kind of blatant disregard for the law (3 strikes??) should result in having the license revoked.

  7. Lane:

    Would you care to be more specific, as to where DFI was dead wrong? The charges against them are quite detailed.

    And while they still advertise, DFI seems to be saying that what passed for legal (or was illegal, and ignored) will not be tolerated going forward.

    Since their advertising model and success relied on deceptive advertising, there’s no assurance their model will be succesful going forward.

    I wish you well.

  8. I just got off the phone with a large expanding CLA firm. Their business model is to absorb LO’s seeking reprieve from having to become licensed and the broker requirement to disclose ysp. They are calling themselves a Mortgage Banker (not a Bank) because they fund and sell loans directly to Freddie Mac. How is the consumer supposed to differentiate between non licensed LO’s under a CLA ‘Mortgage Banker” and a licensed LO under a Mortgage Broker? Clearly they are not a chartered bank and do not claim to be a Bank. If they are not a Bank how can they be Bankers? That as a banker they can make certain fees ‘go away’ just like the bank! Is this deceptive? How long before CLA loses it’s loophole status?

  9. Susan, they could be a Correspondent Lender which recently, thanks to legislation passed by WA State, requires them to be registered under CLA instead of MBPA. Our company is going through this transition as well. It’s not that we want the the loophole, we would MUCH rather be MBPA than under CLA, but do not have a choice since we have inhouse underwriting and fund from our own credit lines.

    I agree with you–this legislation has really made it confusing for consumers. I’m really hoping that when the national licensing goes into effect (HR 3221) that any LO who originates a mortgage loan will be required to be licensed and be held to the same standards for the sake of the consumer.

  10. Hi Susan,

    Consumer loan companies are not banks.

    Advertising themselves as “mortgage bankers” is extremely risky as this is one of the violations cited by DFI in their statement of charges against Paramount Equity.

    If I were an LO today and was being recruited by such a company, I would ask them if they were familiar with the recent Paramount Equity DFI investigation.

    If the company is not familiar with that case, or, even worse, if the company IS familiar with the case and is still making a decision to advertise to YOU that they are a “mortgage bank” I would not consider that company as a potential employer.

    Imagine having to explain to your clients why your company’s name is in the media and on DFI’s naughty list?

    The CLA loophole is only around for another year. All LOs will become licensed by July of 2009.

    Realize that by going with a CLA that doesn’t have to disclose YSP, that provision is only in place when the loan is funded through the consumer lender’s correspondent line of credit.

    When a CLA company BROKERS a loan, YSP MUST BE DISCLOSED.

    Maybe you could ask the recruiter about this and see what he/she says.

    Then ask what percentage of loans are brokered v. closed on the CLA’s credit line.

    CLA’s don’t want to have to tell the world that they’re consumer loan companies.

    Saying “mortgage bank”
    sounds like a bank
    does not sound like a broker
    does not sound like a consumer loan lender.

    But it’s deceptive.

  11. Jillayne:

    Do you think DFI would make a distinction as to whom the firm advertises to?

    Susan seems to indicate they are advertising to LO’s that they are a mortgage bank, with it’s attendant benefits, whereas Paramount’s deception was to advertise to the consumer that they were a mortgage bank.

    One would think the standard would be higher, advertising to the less informed public, rather than to to the supposedly better informed LO, and that the use of the term in this case was intended to be an “insider” term for their business model.

  12. Jillayne:


    Not all CLA lenders or mortgage brokers advertise. Many are set up as net branch models, and do not advertise to public, only to attract LO’s, who may, or may not, advertise the services of the net branch.

    Regardless, LO’s should do their due diligence when selecting who to affiliate with!

    Good luck Susan!

  13. Hi Roger,

    You are correct. Along with that, some CLAs allow their branch offices to advertise.

    The branches are suppose to run all advertising through their manager. Sometimes that happens, sometimes it doesn’t.

  14. You folks amaze me, you speak about topics you know nothing about. I am an old employee of Linden Home Loans and they had their radio ads reviewed by DFI 5 times throughout 2006 and 2007. Each time DFI responded to them “in writing” that there were no apparent violations with the ad and that they can continue to run it. This was “in writing” and is documentable at DFI because it is a matter of public record, so DFI is as liable in all of this as anyone!! That was also DFI’s achilles in their negotiations with Linden and so they let them off easy. Their fine was cut in half, they can still originate loans and they neither admitted or denied any wrong doing in their consent to the charges. Look all of this up, read the consent order. Do your research for once Jillayne, your blog would probably be alot more credible and not just a rant site for whiners!!

  15. Carl:

    First, Linden was in violation of the federal law regarding the legal way to advertise consumer credit. Read it, and you will see.

    That they were not the only one violating the law does not absolve them of the responsibility to obey the law

    Second, if your allegation that DFI gave them written approval is true, and it is a matter of public record, then can you provide the link to that record?

    The SOC mentions nothing about DFI giving them prior written approval to advertise illegally and deceptively.

    To state something as fact and part of the public record would imply that you have documentable sources.

    If it helps any, I agree that DFI was FAR too lax in preventing illegal advertising in the past. They seem to be much more diligent these days.

  16. Hi Carl,

    The Statement of Charges is actually in the article above. So I’m not seeing where you believe I am providing inaccurate information.

    Beyond whether or not DFI gave written permission to air the ads, DFI’s findings were salient:

    “Department of Financial Institutions discovered that Linden promised consumers residential mortgage loans at “1% interest, with no points and no fees,

Leave a Reply