Laura Kiel at Kiel Mortgage circumvents all the puffery of advertising of rates by essentially saying in her recent ads that advertising rates and programs are essentially “backwards” looking of what was or may have been offered and that free appraisals or other gimics offered are a sham of advertising. Borrowers are paying for it one way or another.

I tend to agree with her. Unfortunately, consumer psychology is greatly tuned in to “rates.” So much so, that some consumers foolishly pay huge fees in discount points obtain a rate that may take years and years to recover their costs. But, they can certainly tell their neighbor that they got 4.625% when they could have received a rate at 4.875 costing them zero in discount points. So, my guess is that those who advertise rates even though they may be backward looking or only available to a select group of borrowers (say 740 mid FICO borrowers), they are probably highly effective.

The state regulators have far more serious problems to deal with when compared to false advertising….unless the false advertising is a serious threat to consumers. They have to triage the complaints.

If those who are left standing in the mortgage industry want to stop deceptive advertising, then they should take a look at how the Realtor Code addresses ethics in advertising, write a code, and self-police.

Yes, it does take time. Time is money. If we don’t want to do something, we can pay someone else to do it for us. That’s why professional associations (such as the Realtor organization) collect dues: To pay those people to do the work that we don’t want to do.

IF advertising ethically is important to the mortgage industry, then the mortgage industry needs to do something about it themselves instead of pushing this all onto the state.

IF the industry wants the state to do it’s job, then be prepared for harsher laws and HIGHER state fees.

Pay a professional assoc or pay the state. Any industry is far better off self-regulating something like ethics in advertising instead of letting the state do it because costs will be lower and it will be out of the public eye.

The industry has to WANT to do this, though.

At this point, the industry seems FINE with allowing things to be what they are. The downside is that consumer respect and trust is lower when compared with professionals who are self-regulated, IMHO.

The regulators have not made illegal advertising a high priority. I have concluded it is a poor return on my investment of time to regulate the industry, in the absence of their support, so I have curtailed my efforts. There are certainly more fullfilling hobbies to pursue.

Evidently there is little interest or incentive among the real estate marketing companies to stay in compliance, or to enforce compliance against one another. The same may be true among mortgage advertisers, as there is ample evidence of deceptive and illegal advertising in that arena as well.

Calling the violators is largely a waste of time, as you and I have both discovered.

As we have so painfully learned, the market place has it’s limitations at restricting harmful economic behavior, and we must have meaningful government regulations and enforcement.

Frankly, absent government policing, the best solution I can come up with is to the make the media carrying the advertisement liable for violations of the law. Otherwise, the benefits for each individual to cheat outweighs the calculated costs of getting caught. As it stands now, the media is explicitly absolved of ANY responsibility for advertising misleading credit terms.

Regarding the phrase about the $8000 credit (# 11 and 12), I side with Ardell. The credit is a little more complicated than the phrase “first time home buyers” covers. Oddly, it is more generous. The presumption that occupants of a rental community are largely qualified for the bonus is supportable, even if some residents are not.

For example, a person could be the owner of a residential property, and still qualify for the bonus, provided the property the person owned was NOT their primary residence.

Rhonda, regarding “rates are historically low”, I prefer the phrase “rates are hysterically low”, as it gives plausible deniability and adds a bit of fun.

Seriously, the phrase is sufficiently vague to pass muster legally, and ethically. Of course, it loses it’s impact with tiresome repetition, as I have heard that phrase far too often.

Still, it would be easy to disprove the statement. Are rates at 1%? They were a few years ago, according to some mortgage advertisers, and no such rate is currently available. Of course, that depends on the interpretation of “rates”, a term that is inherently vague.

Finally, Realtors interests are largely to get the market moving and making transactions happen. They promote that activity. Classical economic theory tells us that when trades happen in the absence of coercion, and with reasonable disclosures, both parties to the trade emerge happier, and the world presumably is a better place for it. It does not guarantee that outcome, nor can it.

Let them promote the benefits of engaging in trade, while requiring them to make reasonable disclosures, in compliance with the law.

It likely is be a great time to buy, and a great time to sell…for any individual buyer or seller. It cannot be true for all individuals, nor should we subject it to such a stringent test.

I assumed the “buyers rebate” was more specific in the letter, as in “the agent suzie buyer’s rebate of x cash toward closing costs”, but Jillayne left that part out. It could depend on the purchase price or seller offering amount, so it’s possible the amount was TBD.

Youve been patient = Good advertising copy. Got our attention. N

You’ve waited for the perfect time to buy a home = Isn’t this always the case, no matter what the market is? N

Well this is it. Home prices have bottomed out = Puffery to encourage inquiry and action by the reader. Y & N

Many experts see prices rebounding from current lows = fun with statistics. Everyone does this. N

The $8000 FTC is available for a limited time = Yes, so what? N

The…Buyers Rebate is yours when you use me as your Buyers Agent = ????????????????? Y & N

And now Mortgages are at their lowest since 1971 = N

Your patience has paid off = N

A couple of observations: 1) Terrible piece of writing, 2) No serious adult would spend more than one nano-second reading it, 3) Emblematic of the level of professionalism in our industry.

Those are too many questions that are way too off topic to answer in the comment section.

Yes, I have some opinions about where we’re headed. I taught a class several years ago, just when Redfin and Zillow were picking up steam called “RE 2.0: How To Create a New Business Model.” It was a very fun, cool class, but it was not a big seller. I will tell you why off blog. What’s more important is that I believe the political structure being what it is, the bigger real estate companies and NAR will be with us for quite some time, the one exception being if we sink into a depression. Then all bets are off and those companies and associations who can radically transform will survive.