Linden Home Loans Charged with Bait and Switch Advertising

The Washington State Department of Financial Institutions (DFI) has charged Linden Home Loans, “Home of the 1% Mortgage,

107 thoughts on “Linden Home Loans Charged with Bait and Switch Advertising

  1. Pingback: RealEstateUndressed » Blog Archive » I’m Sorry, But After Suffering Through These Guy’s Phoney Advertising, This Warms The Cockles Of My Heart

  2. Hi Kary and Rhonda,

    I believe there to be a minority of people who are clueless. On the other side of the bell curve, there is another minority of people who know MORE than we do about mortgage lending and real estate.

    So the majority of consumers are in the middle, which means those of us in real estate and mortgage lending know more about the ins and outs of how mortgages work, than the average, random consumer. This leads to a power/knowledge imbalance.

    It’s not that people are stupid, instead, I look at it from a sociological perspective. I believe people irrationally act as though others have our best interests in mind because humans are hard-wired with hormones that make us feel good when we cooperate. We want to believe that there is a 1% mortgage for the same reasons why we want to believe there’s a diet pill that will magically remove those last 10 pounds, and we want to believe in love at first sight, and so forth.

    Retail marketers capitalize on our internal drive to connect with other people. Hormones associated with sexual reward are also released when people work together economically. Said another way, it feels good to believe in the 1% mortgage.

    Corporations exist to make money (within the bounds of the law) so any corporation that exploits human emotion for profit is only doing what it is designed to do. People who work at those corporations are highly influenced by their environment. Leaders at the top create an environment of exploitation of the consumer, and reward those that follow this path. There you have an extremely simplified foundation of the subprime mortgage meltdown.

    This is why I continue to say that in order to truly fix the subprime meltdown problem, we must transform the relationship between the loan originator (no matter where they work) and the consumer from a retail relationship to that of a fiduciary relationship.

    Corporations will never agree to this on their own, because corporate structure dictates profit and elevating LOs to fiduciaries would initially have the power to negatively effect short-term profits.

    LOs who are addicted to the easy telephone leads want to believe that their corporate leaders are telling them the truth, (“This ad is perfectly legal”) because the cooperation effect makes them feel good, too.

  3. I’m still trying to figure out why WA downgraded from Fiduciary for RE Licensees to Statutory. I don’t know any other State that did that. Maybe WA should upgrade and reverse that decision.

  4. Hi Kary,

    Well, you can look at the 1% mortgage as just that.

    Being able to afford a bigger home or a home in a nicer neighborhood, or a home that is seemingly worth more, is a pathway into being able to attract a higher quality mate.

    We live in a culture that celebrates success and success is often (though not always) defined by money, among other things.

    Look at Linden’s Home Free contest page:

    The picture chosen is not a single woman or a single man, it’s a couple, and! surprise! they look attracted to each other.

  5. These comments have meandered a bit (the 1% loan, Linden, illegal advertising, effective advertising, and fiduciary responsibility). All wonderful and potent subjects. I’d like to address them separately.

    I have settled down from my happy dance when I saw that Linden was being held accountable for their illegal activity. I have been trying to get it stopped for some time.

    First, negative amortization (the 1% loan) is not illegal, or immoral and it makes good sense in some situations (primarily where temporary cash flow improvements were more important to the borrower than the cost of money). The prevailing paradigm of the past 5 years was that property values would continue to rise indefinitely, so now that that joyride has stopped, the neg am loan does not look so good, and generally no one is interested in them anymore.

    Ethical problems arise when the borrower does not understand the terms (perhaps because the LO chose not to explain them), or when the lender abuses the borrower by charging too much, making too much on the backside and driving up the margin. Many LO’s (including myself) would present an Option Arm as one of several loan types as a defensive measure. If I did not explain the neg am loan properly to my potential client, I risked losing them to someone who did not explain the risks, only the benefit of a low payment. Most borrowers ask for the “lowest rate

  6. In a related subject, many people in this business have labored quietly and individually to stop illegal advertising. Based on DFI’s promise to start cracking down on illegal advertising in September 2007, I began to log a weekly list of illegal advertising in the Seattle Times Mortgage rate directory, and send that information to Anthony Carter of DFI. It has resulted in a few advertisers cleaning up (or dropping out), but the majority of the abuses have continued, despite calls from DFI to the abusers regarding the illegal terms. That demonstrates an amazing disregard for the consequences of illegal advertising on the part of those brokers.

    Let’s assume these brokers are rational business people, and briefly set morality aside, as businesses and corporations are not required to be moral, merely profitable, to survive. Individuals can choose to be moral, and the vast majority choose to do so. Some choose to do so in the course of doing business, as they find that the choice helps them to survive in business, and presumably gives them greater satisfaction in their private lives.

    Since businesses must generally set profitability ahead of morality, the risk/reward calculation must favor violating RESPA laws instead of compliance, in the anticipation of increased profits. We can see that it must be generally true, based upon the practical responses of the violators. This can only be true if the cost of violation (and the potential for even being caught) is lower than the fines or loss of business.

    I have been somewhat frustrated with DFI’s ability to put a stop to illegal advertising in this state. I discussed this matter with Jillayne, and with Anthony Carter of DFI. Both shared a similar viewpoint, to wit: The government does not have enough resources to track down and prosecute the offenders, nor enough industry specific knowledge to spot the violations. They both suggest that the industry needs to do a better job of policing itself, based on the assumption that the industry members would have an even higher motivation to stop the anti-competitive abuses, greater capacity and inside knowledge.
    (Jillayne, please correct me if I have misrepresented your viewpoint). To date, that has not occurred, and WAMB (the Washington Association of Mortgage Broker’s) has thus far been largley ineffective in policing illegal advertising. I doubt many of the offenders belong to WAMB.

    I could be hopeful that industry would rise to the challenge, but the pragmatist in me says otherwise. Here’s why.

    You may have noticed that banks are almost always compliant with RESPA laws in their advertising. Why would they do that, if illegal adverting is more profitable? Are they more moral? I think not. Do they have more to lose? Certainly. Most broker firms can dissolve and reassemble quickly, and not leave much stranded capital (brand names don’t mean much, that’s about all the broker has to lose).

    Additionally, since there is so much more capital investment required, banks are much more concentrated than brokers. Therefore, the individual reward accruing to each bank for devoting time and money to enforce compliance on their competitors is so much greater than it is for the diffused broker industry.

    I cannot significantly improve the profitability of my business (independent loan originator/broker) by policing my competitors. They are too many, I am too few. However, as a moral individual, I feel duty bound to make an attempt, and devote a few hours of my time to the common good. If I had a boss, he/she would tell me to stop it, and go make some loans.

    To put it in the vernacular, it is like trying to stomp out the scurrying cockroaches in the kitchen when the lights come on. I may squish a few with my own two feet, but the majority scuttle to safety, only to return when I leave the room. It doesn’t solve the problem, but it is viscerally satisfying.

    Barring systemic/legal changes, I can only hope that others will find that stomping on roaches is also satisfying (if not profitable), and that the immense racket of thousands of feet stomping may persuade the roaches to leave, or convince a third party to effect a more lasting solution.

    So I suggest to you readers, wherever you are, make a New Year’s resolution to go into the kitchen and stomp on some roaches. It’s good clean exercise, and it may help solve a problem!

  7. The last subject is regarding fiduciary capacity.

    I have to confess my ignorance on the subject. I suspect that in circumstances where I have had to capacity to act fiduciarily (in the absence of a superior’s profit motives), that I have done so. At the least, it has always been my intent to act in the best interest of my client, subject to a reasonable profitability for myself.

    So, I have some questions for Jillayne, as she seems to be the most knowledgeable about the subject, and is advocating for it.

    What exactly is a fiduciary, in the mortgage business? Are there independent loan originators (ILO) who legally/officially act in this capacity?

    What are the risks to an originator associated with being a fiduciary? Would you need to be bonded/insured?

    What are the costs (in time and/or money) associated with being a fiduciary? Additional record/note keeping?

    What are the monetary benefits, to offset the additional costs (if any)?

    Could an ILO advertise that he/she is a fiduciary ILO, and if so, what benefit would that provide?

    Finally, is there a benefit to being a fiduciary independent loan originator, in the absence of a legal requirement for all ILO’s to become one? Is there a benefit to being on the leading/bleeding edge on this issue?

    It is a very intriguing and provocative subject. If I fully understood the risk vs. reward implications, I may find myself enthusiastically backing the concept, and I suspect there are others who would as well.

    I agree that corporations and businesses will not generally support the concept, but I think there are a good number of ILO’s that would, since they may already be acting in that capacity, as I firmly believe that individuals have a greater tendency to act morally than do businesses.

  8. One of my best friends, he had been stuck in this loan program for 3 years. The Lo didn’t tell him this is Neg. Amortization loan. So, he just paid the minimun amount every month. At first, he was quite happy for couple months by only paying 1% interst. However, the happiness didn’t last too long. The interest rate increased fast…until he found out his priciple has become more than he initial borrowed.
    Actually, I think this is a very simple question. The interest rate for bank CD is around 5%. How come those lender lend money to you at 1%? It must have some tricks or requirements. Business purpose is to make profit.

  9. OK, here is my standard description of a Neg Am loan. I’ll try to be brief.

    1. It provides the lowest possible minimum payment (usually based on a fully amortized 1%-2.95%). That’s the sole benefit, but it’s a whopper.

    2. The minimum payment is just that: Pay it, and you are in compliance with your loan terms. What you owe each month depends on several variables, but to simplify, it will be the interest only on your current balance, at a rate to be determined by an fluctuating index, and a margin that is determined by the variables. Or to put it more simply, it will be about twice as much as the minimum payment.

    2.5 The difference between your minimum payment and “what you owe” will be added to your loan balance every month.

    3. The minimum payment will increase each of the first 5 yrs (there are some variations of this) by 7.5%, so if you had a minimum payment in the first year of $1,000, the 2nd year it would be $1,075. Not a big deal, and intended to keep the equity balance even for the 5 yr duration. Generally, if property values go up by 3% per year, the increase in your equity will be matched by the increase in your loan balance. Obviously, that has not turned out to be true in various most of the county in 2007.

    4. There is generally a 3 yr prepayment penalty, but it can be bought out at origination. When you buy it out, it reduces the YSP so much that the broker has no choice but to charge points, so it has the effect of a prepay penalty, only its prepaid, sort of.

    5. At the end of the 5 yr period, or whenever you reach the negative amortization cap (which varies considerably from lender to lender), whichever comes first, you must pay the fully amortized rate at the current interest rate. Expect your payment to at least double.

    The loan is NOT appropriate for 1st time home buyers with little money down, or for financial illiterates, but I am afraid it has been used in such circumstances all too often.

    Today, most lenders don’t offer them above 90% LTV, and even then it would be tough to qualify.

    On the positive side, these days I rarely have to go thru the full explanation before the borrower cuts me off, and says, I don’t want that!

  10. Hi Roger,

    Thanks for your very well thought-out comments. In regards to comment number 13, here is a quote from you:

    “the cost of violation (and the potential for even being caught) is lower than the fines or loss of business.”

    We see this day in and day out all across the nation as large national title insurance companies have settled RESPA violation charges with HUD instead of going to federal court. They pay out a million dollars in fines here and there and when you add up all the money paid out in fines, it still does not even come close to making a dent into the profits made while violating the anti-kickback provisions of Section 8 of RESPA.

    I’m not so sure I’m in favor of harsher fines, but maybe this is the only thing that will work? What do you think?

    Maybe it must get much worse before a corporation will sit up and take notice. How about shareholder lawsuits against the large corporations that continue to disregard federal law in search of profits?

    That might help deter a publicly traded corporation but might not really solve the problem when we’re talking about a medium to small sized mortgage brokerage firm, often run as a privately-held corporation.

  11. In comment 13, Roger says,

    “You may have noticed that banks are almost always compliant with RESPA laws in their advertising.”

    Well, I suppose so but this is not always the case. Wells Fargo was put under the gun recently by non-profit agencies who have accused them of predatory lending.

    Banks have access to more internal resources than a small to medium sized mortgage brokerage firm. For example, federal or state chartered banks have:

    1) a compliance department staffed with real people
    2) an auditing department, also staffed with real people
    3) an education and training department, with: REAL PEOPLE.
    4) a legal department staffed with attorneys

    Most small mortgage brokers have none of these resources readily on hand. A medium sized mortgage brokerage firm may have some of these departments in place if they have FHA approval.

    If not, they would have to hire an attorney by the hour to look over their advertising materials before they are aired (or published) and most brokers might just do what you describe; weigh the possible consequences if caught, and run the ad.

    So back to this idea that banks might have better advertising. I’m not so sure I would agree with that 100%. There was a study done here in Seattle, and I’m so sorry, I can’t remember the exact date but it was part of a lawsuit that never went anywhere so the name of the case is escaping me at the moment. During that research, it was determined that a certain percentage of APRs quoted in newspaper advertising were wrong, and that included APRs quoted by banks, too.

  12. Roger says,

    “I cannot significantly improve the profitability of my business…by policing my competitors.”

    Yes, that’s true. However, if we don’t all do a little something, then we ought not be surprised when our industry is faced with harsher and more state and federal laws, and when the price of renewing our license doesn’t double, triple, or quadruple, but goes 5, 6, or 7 times higher than it is now. Money to enforce existing laws will have to come from somewhere and the most logical place is from the practitioners, which will eat into profits as well.

    I know you took Kevin’s ethics class, so you know what he would say. He would say we’re all better off if we all help each other instead of turning each other in to the regulators.

    Even though the Association of Realtors gets slammed around, we can look at the history of the Realtor and say that Realtors are about 100 years ahead of loan originators for that’s about how old their Code of Ethics is. Yes, Realtor members have to take time out of their day to sit on an ethics board and hear consumer and competitor complaints but in doing so, they can keep government out of their hair, which keeps the cost of doing business down, and promotes consumer confidence in their industry.

    Mortgage brokers and loan originators have a beautiful opportunity with the current mortgage crisis to use this time as a way to transform from retail salespeople into emerging professionals, and to truly differentiate themselves when compared with bank loan officers and consumer loan lenders.

  13. Hi Roger,

    I’ll write a new article about fiduciary duties that answers all the questions posed in comment number 15. Within the Dec 21st “Governor’s Task Force for Homeowner Security” report to Governor Greigoire, there’s an entire section in there on f-duties and how mortgage brokers/LOs definitely do not owe these duties to consumers in this state. Let me fully digest that report, first.

  14. This could use some further fact finding.

    However, I would technically separate predatory lending from illegal advertising. It is likely that one will follow the other, as someone who is willing to break the law in advertising for his personal gain, seems more likely to violate other moral and legal standards.

    A lender could survive by NEVER illegally advertising, and still be guilty of predatory lending I suppose, but it would be difficult to catch and prosecute them.

    The Linden case revolves around illegal advertising, and bait and switch tactics (that is, never having the low cost product on the shelf that is advertised in the media), and not on predatory lending.

    Defining predatory lending sort of reminds me of that quote about about pornography “I cannot define it, but I’ll know it when I see it”.

    We’ll see what “it” is defined as in this new round of law-making. The existing standards are pretty low. We need to create a new culture.

  15. Code of Ethics! As we all know the most important tool in this business is reputation by our past clients. Referral are the best business design to create. What Linden has done will effective the bottom line for t Linden for a long time by effecting the reputation. I’m sure recruiting for Linden will be very difficult now that the name has been sting with negative press. False adverting is just plain wrong and they know better than to advertise such false information. I would say there is no such thing as a “Free Lunch in the Mortgage Industry”.

  16. Jillayne:

    Thanks for the responses.

    I do not think we are on opposite sides here, by the way, and I don’t think you feel that way either. Just trying to hash out solutions, and see if anyone wants to follow along.

    Thank you for accepting the challenge of presenting the case for becoming a fiduciary. Take your time, it seems complex.

    Here’s what I think ILO’s should do.

    Resolve to get informed, join the debate, and associate with like-minded ILO’s and other professionals. Be prepared to make an investment in something other than your sales skills. Step on a few cockroaches (see previous posts).

    Regarding the title companies troubles.

    Oddly, it is excessive regulation that has contributed to the problem. As a result, there is very little difference in costs between competing title companies (I shop periodically). With variance in costs so low, title companies are left to compete on service, or “favors” in order to differentiate their services. There is obviously a large incentive to cheat.

    Title companies are regulated by the Insurance Commissioner, not DFI.

    There have been some interesting articles on the subject, but they seem to largely miss the point. They blithely suggest “shopping” for title rates, but it would not benefit the buyer to do so (compared to the time spent shopping), if there were not significant differences in price and service.

    I have discussed the problem with several title reps, and they say that the regulation makes it difficult to compete on price, as they cannot adjust their rates but once a year, and then it is done in a process similar to the health insurance industry, where their competitors get to see their quotes.

    Weird, I know. If a title person wants to take on that bad boy, please go ahead. Meanwhile, I won’t shop title prices again for a while.

    BTW, be thankful you are in WA state. I priced out title in FLA once and nearly fell out of my chair. It was 3 times as expensive as it is in WA, don’t know why, better lobbyists, I suppose.

    It’s not in the article I attached, but in a different article he mentioned going to a different system used in a different state that would result in lower costs for borrowers.

    Anybody know anything about that subject, and where it is heading?

  17. Sure. That person could have been referring to a midwest state, Iowa I believe, that does not have title insurance companies. Instead, the government issues title policies for a very low fee. Iowa’s state bar association is in favor of the system, the assoc of Realtors is against it. Read more here:!OpenDocument

    That title rep would arguably not be in favor of the Iowa system since if we went that way, he would be out of a job. Instead, he might have been referring to the way Idaho regulates the amount of money title reps can spend on Realtors and LOs. Idaho has looser regulations on how much money a title company can spend on consumers. But we’re getting off track here. Let’s try to keep the comments focused on deceptive advertising. Thanks!

  18. This case is interesting and the practice of Linden sounds familiar. I have seen and heard many companies doing the same thing on their ads. I don’t know how many of them do the bait and switch tactic thogh; I doubt it. Borrowers are often mistaken the pay options with min payment of 1% or so with the actual interest rate of a loan. Most brokers, lenders, and LOs do not explain well about all the cost revolving around doing this kind of loan. I don’t encourage my clients to do this payoption loan unless it’s clearly beneficial to them. In fact, I’ve never done one for my clients. I think it costs them more than helping them.

  19. This sounds like a good example of why borrowers should ask as many questions as possible. And, like most things in life, if it sounds too good to be true, it probably is. Compare APR’s with another lender and go with someone you trust. I will be interested to see what the DFI has to say about this.

  20. If it’s too good to be true…..find out why? Ask lots of questions and try to be an informed consumer. I thought we as a nation we’re becoming more informed, we certinaly have access to plenty of information. If it’s the largest purchase most people will make in their lifetime, it needs to be looked at outside of just an emotional purchase. And yes…there must be penalties to those who blatenly misrepresent themselves to the public. Are there still conserquences to our actions?

  21. Not all situations that “sound to good to be true” are bad. Some really are good. In this case it wasn’t and that is why consumers need to ask questions and compare numbers.

  22. I think it is great that this company was investigated and held accountable (or looks like it is going to) for it’s deceptive advertising. My question is how does an “illegal” add be placed and run over and over in the first place? Maybe their should be some regulation that an ad be reviewed and approved for financial advertising so that it in compliance. I don’t know, just a thought.

  23. If it sounds to good to be true it usually is! Well it’s about time some pressure is being put on companies like that. I’m sure there are plenty others bracing themselves and hoping not to get caught. Have there been any other companies recently falling into that situation and if so where could we look to get more information?
    I agree with the review approach, better to be safe then sorry.

  24. Deception never pays off. Like i previously said I feel all successful businesses need to rely on their repeat customer and when honest and ethical business practices are followed consumers will recommend their providers and their business will flourish like the great rotunda of the amazon. haha. Anyways, however when unethical business practices are followed and consumers are deceived and cheated eventually the buisness that conducted their operations with these principals will eventually crumble and fall. I believe the current condition of the industry is this turning point where it is impossible for loan originators who unethically conducted business find it impossible to survive but it is up to us who reside on the side of morals and ethics to preserve our industry!

  25. Jillayne:

    Could you give us an update on Linden?

    Last I saw, Linden was still in business, had not shut down, had not paid the fine, their website still displays the BBB logo, etc., still have the same loan originators working for them.

    In short, other than a one day news cycle with back page coverage in the the Times and PI, and your blog, they appear to have suffered nothing for their deception, and apparently profited greatly.

    I hope I am wrong.

    Until these outcomes change, I see no reason that mortgage advertisiing will change.

  26. Hi Roger,

    DFI has issued a statement of charges against Linden but no final consent order has been handed down. Linden is planning on fighting the charges, I have been told that they have obtained counsel and requested a hearing with DFI.

    Most mortgage brokers that I know keep well advised of anything that DFI is up to. DFI has sent word out that they plan on enforcing deceptive advertising. I say we need to wait and stay tuned.

    There’s a commission meeting on the 13th. I can’t make it but I’m sure it will be packed.

  27. Thanks Jillayne.

    You know, I should go to that meeting…pitchforks and flaming torches, anyone…sorry, it’s easy to get caught up in the frenzy :).

    Should be interesting, and it is practically in my back yard.

  28. As long as these option arm loans and other hybrid products remain available to wholesale, we will continue to see this stuff happening. Lawyers will continue to find loop holes for their clients to jump through. I think, just like reverse mortgages, certain products should not be included with the conventional products available to wholesale. All option arms can not be advertised as well. Deceptive advertising is nothing new and is not only limited to the mortgage community. However, when we are talking about the largest investment most people will ever have, there needs to be black and white guidelines on advertising.

  29. Even though I agree that what Linden was, and probably still, is stating in advertisements is unethical and misleading, I also feel that just saying the ad is wrong is not enough. Linden is not the only one…we have all seen the Countrywide TV spots talking about a no cost refi without any explanation of how it works and what the risks are. Why has Linden been singled out, but Countrywide has not?

    I am not proposing more regulation by government; I am in agreement with you on this subject. What I would like to see is a minimum requirements guideline for advertising. This can be something like what the drug companies are required to do in drug ad’s (clearly state the harmful potential side effects; advise the consumer to talk to a professional about their situation, etc). I feel that this can be self regulated very easily.

  30. Linden may be one example and is in the hot seat because the more circulation it may have hit with their radio ads, however there are so many lenders out there with “vague” promotions that they are running. Walk in to all your local banks, most of them have them posted on dry erase boards etc, with no fine print.

    I totally agree with Ali, the drug companies have to clearly state the harmful potential side effects of a drug while advertising it, whether in writing or on text while on the air. However they are FDA monitored, thus the compliancy.

  31. If they can not provide the loan they promise in their ads then there is a seious problem isn’t there. In the car industry for example, you will see leasing ads that seem to good to be true, but they are not. However, sometimes it may be for the low trim level that most people do not want and the cost will be higher for the higher sought after vehicles. So do not say you can do something you know 100% ofthe time you can not do it.

  32. I got an add card in the mail shortly after I had refi’ed telling me about a 1% loan with my lenders name on it. I called and he happily said they were associated with them. But later I say the fine print and it said they were NOT affiliated. I talked with my broker and she said that happens alot–using their name. Can’t remember the name of the lenders ad. Another Linden?
    My question is when borrowers saw this why did they proceed!!??

  33. Tim, I guess people want to believe. I’m always relieved when my clients call me about the junk they receive in the mail. I’m helping a couple right now who almost fell for a piece of mail that promised they would “skip two months payments”…since they were considering refinancing, this sounded like a good deal. This was an out of state lender with out of this world costs for their rate. I’m glad they had second thoughts and called a friend who referred them to me. (Not just because I gained a new client, I’m glad the bums who sent the post card are NOT getting paid from these home owners).

  34. If it to good to be true then it probably is. Often I have spoke of an advertisement on TV or radio and wonder how they can get away with their entiscing marketing. The knowing consumer realizes that this is definitely a negative am loan and what do you mean “no fees/no points”. If any of those consumers are thinking about bailing from their mortgage lucky for them, a lawyer could surely help them.

  35. You know that guy in the movie who yells out the window

    “I’m mad as hell, and I’m not gonna take it anymore”

    Well, that’s how I feel about illegal advertising in this state. And I am willing to do something about it.

    I’ve already volunteered over 40 hours to clean up the Seattle Times Mortgage Rate directory. At least no one says “lowest rates” anymore (a blatant violation that has gone on for years), but it is still filled with rates and APRs that will NEVER be honored.

    I complained about Linden to the radio station and DFI. Something happened, but I am not taking credit for that outcome.

    Let’s take on the illegal ads in direct mail too!

    If anyone reading this post wants to spend the cost of a stamp to help, send me the mailer that you think is illegal, and I will review it, scan it and send it to DFI with a detailed explanation of the illegal portions (if any), and CC the lender that sent the advertisement (all at my time and expense). Include your email address if you want the analysis and copies of the letters sent.

    You can mail it to:

    Roger Ingalls
    14900 Interurban Ave SE #295
    Seattle WA 98168

    If you prefer not to spend money on a stamp, you can fax it to


    Let’s stop this stuff. I’m sick of it, and nothing being done to stop it from happening. Let’s collectively do something, and make a difference. If lenders know they are being watched, then maybe they will cease to advertise illegally.

    Shout out the window and say

    “I’m mad as hell, and I’m gonna do something about this!!”

    Feels gooood, don’t it!

  36. Thanks for providing the DFI address, I should have thought of that.

    It isn’t funny.

    And I am serious.

    And it’s not going to stop unless we band together to make it stop.

    You cannot believe how many times I have heard another lender say “I thought I was fighting this alone!”, when the subject is illegal advertising.

    It will ONLY become effective if we fight this together.

    By all means, send it to DFI directly, if you think it is better to fight it alone.

  37. I hope the government will require strickter guidlines for advertising not to mislead the consumer as Linden and other mortgage compaines did and will continue doing.

  38. Linden should get the AXE!!!
    If in fact Linden is found guilty of bait-and-switch, predatory lending, and false advertising they should definitely go down, And go down hard! Maximum penalties should be imposed, They should be made an example of and displayed on national television so that everyone can know to be careful. There ARE more out there that have been violating state and federal laws. And they should go down too!

  39. It is good to hear that the DFI are taking these kind of actions. They will set a good example of the seriousness of the issues. Companys should advertise what they can offer, not half truths and false advertising, if its too good to be true, theres usually a catch involved.

  40. Linden’s case could serve as a warning to other companies not to do the same thing. Also, stricter guidelines will help diffuse misleading advertising. Always read the fine print. I agree with S. San – if it’s sounds too good, then there usually is a catch involved.

  41. Yes, 1 % of the loan for the house cannot be. Advertising has been directed to entice the borrower. It is not ethic. Very actual article. In such important trade should not be the main stimulus benefit, it is necessary to think in the first of satisfaction of needs of the borrower…

  42. I’m surprised that if Linden is found guilty of bait and switch the outcome will only be to lose their license for 30 days and incur a small monetary fine, considering all the customers that were obviously taken advantage of. That sounds like just a slap on the wrist, but I guess it is better to do something than nothing at all.
    I think it is a fabulous idea to give homeowners who have been taken advantage of the opportunity to sue companies that take advantage of them. If that starts happening the way those types of mortgage companies advertise will definitely change, or they may just disappear all together!

  43. I think something that would help curtail ‘bait and switch’ and other less then honest advertising would be to give homeowners some recourse. The last I want are more court cases and lawsuits, but if a few lenders had to start buying consumer’s mortgages back because of misleading/dishonest ads it would become a great deterrent.
    Also, even within the current system, there needs to be more “coverage” of the deceptive ads/companys. I follow the industry fairly close and I hadn’t heard about Linden Tree getting in trouble at all. Showing one the consequences of bad behavior can be a pretty good educator.

  44. You didn’t hear about it because it was barely covered in the local media. It hit the 24 hour news cycle locally, Dec 18th, was BURIED in the Times (no headline, part of a business digest), and Phoung Cat Le did a short piece on it in the PI. Google it. The PSBJ and the Seattle Medium also had stories, but ALL of them were essentially word for word from the DFI release.

    This, despite the mortgage broker industry being front page news almost every day.

    Part of the lack of coverage was the lack of identifiable victims. If you do not have a human interest angle, it’s pretty hard to get ink or airtime.

    If it bleeds, it leads, they say.

    There are probably no RADIO ads for the 1% loan anymore, but I will bet there are mailers dropping every day.

    The Times continues to aid and abet illegal print advertising (check the Sunday section, and see how many of those loans you could do!), but the law does not hold them accountable, and they want the profits.

    WE must hold the media accountable. They want your eyes and ears and advertising dollars. Let them know of your dissatisfaction with their complicity in illegal ads. (First, you may want to read up on what actually constitues an illegal ad…when you are not trying to get loans to close!)

  45. Not to mention the broadcast mortgage spam faxes I receive as well as the deceptive banner ads and the mortgage spam.

    All these deceptive pieces of advertising generate leads.

    Mortgage people buy the leads.

  46. Guilty!

    Bought some leads, this summer, hated em! Got my money back (talk about deceptive ads, the leads were nothing like what was promised!), not going there again.

    Keep in mind, it’s not just small time mortgage brokers buying internet leads, it’s also the Countrywide’s of the lending world buying them, in great quantities.

    In 2007, I personally spent about $5,000 on legal local advertising (radio and direct mail), and did not make one penny return on my investment.

    Granted, it may be because my ad campaigns were not as good as my competitors (ouch, it hurts to say that!), but it is just as arguable that the advertising was not effective because of the overwhelming amount of ads that were illegal and deceptive!

    The legal advertisers must band together, and demand the media stop advertising illegally, or this will never work.

    They’re not reading this, are they…..:).

    Back to work….

  47. I don’t believe mortgage companies should be allowed to advertise rates on the radio and television unless they can actually provide that rate. Ditech is promoting a 30 year fixed in the low 5’s on TV. A few weeks ago, this was possible…now? Not without a bunch of point$. You also hear these mortgage dorks on the radio promising they have low 5’s when they don’t any more…not at the cost they’re promoting.

    Advertising rates you can no longer deliver has to be the biggest form of bait and switch.

  48. R and R,

    It’s a violation of the state’s MBPA to advertise a rate that is not available at the time. To stay in compliance, the broker must be able to show a regulator that the rate was available at the time of the ad.

    Remember what I’ve been saying though, our regulators will never have enough money to go after each ad.

    Corporations know this, so they set aside loss reserves in case they are caught, and make a calculated decision to violate the law.

  49. R and J:

    Ah, but here’s the rub!

    Does the rate have to be available the day the ad becomes public (aired, printed, or arrival in home), or the date it was created?

    Since there is ALWAYS considerable lag time between those dates, it MUST be the date is was created, since you nor I have any idea what the rate would be on the date it becomes public.

    I don’t think there is are instructions/regulations for that, and how long you could continue to air an out of date rate.

    A print ad should state the date the rate was quoted from, and probably so should a radio or TV ad. That’s how I do it.

    By the way, I just called an advertiser (a realtor, so I cut them a break) in the Seattle Times Feb 3, that prominently featured a 4.875% rate, with a teeny fine print APR of 4.9867%, and after 2 layers of mgmt, spoke with the marketing person. She said the ad was pre-approved by 2 different lenders/brokers.

    Shouldn’t they know better? Didn’t they have to pass the same tests that I passed?

    I offered to e-mail her the only publication I know of that addresses it coherently.

    I think the state of WA should publish one, if they have different or additional guidelines.

    I do not know if it will change the ad.

    But if everyone in the biz would learn the law, and hold one another to it, illegal ads might go away.

    I ain’t gonna happen by wishing it away.

  50. Well, I read the FTC guide from end to end once again, and it does not address the timing issue (date of creation vs publication).

    It would be nice if it did.

    Both ads in the Sunday times (Westwater and Porters’ Landing) violated the law regarding APR

    “As long as you include the annual percentage rate in the ad, you also may state a simple annual rate or a periodic rate or both, applicable to an unpaid balance.

    However, the simple annual or periodic rate may not be more conspicuous in the advertisement than the annual percentage rate.

    For example, an advertisement for mortgage credit may include the contract rate of interest together with the annual percentage rate, as long as the contract rate is not more prominent than the APR.”

    Additionally, they used rates from January 22, 2008, with a publication date of Feb 10th.

    Rhonda, wasn’t THAT a remarkable day!!!

    Haven’t seen any like it since, and it was a long time waiting for one day so GOOD!

    The inference here is that the rates could have been updated, but the creators of the ad chose not to. Not illegal, but not exactly ethical, either.

    I did as Jillayne has suggested, I called/emailed both advertisers, and pointed out the errors. I think they deserved a break, as they were realtor/developers, but it does illustrate why it is best to stick to your main area of expertise.

    Finally, West Water made the classic blunder: No, not the one about getting involved in a land war in Asia!

    Worse, they offered TAX ADVICE! The ad states that the interest is tax deductible.

    While I’d be the first to say that home mortgage interest may be tax deductible, (as it is generally true, thankfully), I can certainly offer examples where is NOT true! Rhonda can too, cuz we went to the same seminar!

    Ahhh….it’s time to relax, go home, enjoy the family!

  51. I just heard one of the Linden Home Loan advertisements on the radio. I’m not sure if it was a Washington station or one of the stations in Vancouver, BC. I live in Bellingham, and often I listen to Canadian stations, because the reception is more clear. I am sure a lot of the people who live up here do the same. So, Linden Home Loans may have their ads off the air in the US, but citizens from the US are still hearing them and making application.

    I, for one, am hoping they do receive the maximum fine and are put out of business for at least 30 days, if not for good. After the 30 days, people like this will resurface and do the same type of dishonest business. They will just be much smarter about it next time.

  52. Hi Jillayne — I just read the Linden Homes article as part of the requirement for the “on-line” ethics class. Not surprised to hear they are still taking apps and the doors are open. I believe, consumers hear what they want to hear, and react accordingly. Even when advertisements do state terms and conditions, it is at the back end of the segment and hard to follow at warp speed. Make the money and run. Linden may fold, but the principles of the company will just open a new shop and deceive the consumer until they are forced to shut the doors and look for new space and new company name. “Poison Oak”?

  53. Unfortunately it takes gravely misleading ads from companies like Linden to finally get prople thinking about marketing tatics and possibly creating some tougher regulations and repercussions for those in violation. I have to agree with Scott in that I’m not surprised that their doors are still open. Hopefully they’ll get the maximum penalty for conducting their business in such an unethical manner. I think if they were made into an example, other broker shops would revise their marketing approach, if nothing else, out of fear for what would come.

  54. i wonder, by law, what the advertising regulations are ( what we can say in ads and what we can not? ) i also wonder if the dfi interviewed the borrowers on the terms of the loans (such as if they knew there was a prepay penalty or if they knew the balance would go up if they kept making a minimum payment). how much fees were paid is important, but the terms of the loan are important too for the futrue refinance or selling of home.

  55. Hee Kyung

    Thanks for chiming in.

    Almost everything you need to know about legal mortgage advertising is in these 2 places.

    1. Federal Trace Commission (FTC) has a simple handbook that describes legal and illegal advertising.

    2. DFI has a simple FAQ also.

    So, try this sometime.

    Whenever you see or hear an ad, try to determine if it is legal or illegal.

    If you think it MAY be illegal, then contact the author of the ad, and ask them if they know if it is legal or illegal, based on your suspicions.

    Offer to send them the FTC link.

    I can tell you from experience, that MOST mortgage advertising is illegal. And unfortunately, most advertisers get a little defensive when you suggest that it is illegal.

  56. There needs to be punishment that exceeds the payout. Doesn’t make sense to only fine a bank robber 1 million dollars who just stole two! I here consumers talk about Brokerage shops like there the ones who caused the current mortgage crisis. Brokerages provide a valuable took in the industry. There needs to be tougher penalties such as loss of license, larger fines.. Like I’ve said before Bank LO’s should fall under the same rules and regulations as the rest. They should be licensed, have to take continuing education course, and disclose yield spread! I worked for a bank years ago I’m not going to mention it by name but it sounds allot like Wells Cargo. They had the highest fees, the highest rates, etc of any broker I’ve worked for and they are all unlicensed, regulated internally! Linden should have to immediately stop conducting business, pay fines in addition they should look at the all of the individual LO’s who worked there and if they had any part revoke there license as well.

  57. Wow! It’s good to see that some punishment is being handed out to companies that pull stunts like this, although, I do feel as though the punishment should be more severe. Also, I’m surprised that Linden is still in business. I can’t believe that people would still look to them for help with such a huge financial task with the history that they have.

  58. Unbelievable!! It is absolutely amazing to me that Linden is still in business offering mortgages to people not to mention their complete arrogance in requesting a DFI meeting and contesting the charges on their blatantly illegal ads! I certainly hope that homeowners that fell prey to Linden’s deceptions and are now facing the prospect of foreclosure will have some kind of recourse against Linden. If it sounds too good to be true…

  59. Once again, all I can say is that it is unbelievable that a company can get away with their tactics for so long. It is unbelievable that they are still in business, and it is unbelievable that they are not in jail.

  60. It is so hard to believe that they could get away with this for so long. It is down right criminal! I am suprised and frustrated that is was allowed for so long.

  61. Hey everyone, there’s some new bad guys on the block!

    Assurity Lending kept sending illegal mailers pretending to be with VA and FHA, and touting refunds that might be available to the addressee. Clearly illegal, and DFI gave them repeated warnings to stop, but they KEPT ON DOING IT!!

    This is just another example of a blatant disregard for the law.

    Read the SOC, and you’ll see!

    It netted Assurity a $250,000 fine, and a license revoked for 5 yrs. And I will bet anyone that they are still sending out mailers somewhere, with the same illegal tactics.

    So ask yourself, how did it get stopped in WA? Because someone (not me, in this case) repeatedly reported the illegal mailers!

    So don’t stand around expecting the other guy to stop this stuff. Learn the rules, and start enforcing them. In your office, among your peers, in the paper, on the radio, call the media company that runs the ad and tell them it’s illegal.

    They may or may not stop, but if enough of us create a decent sized racket, it is bound to improve.

  62. I agree with Rhonda…if it is too good to be true, it probably is!!!! Shame on them for what they did….I dont think there is anyone that would read this article and be completly shocked that they are still in business…..well lets just hope that each and everyone will get what they deserve!!!

  63. As closely as I think I follow the news & watch the financial press, the Linden case escaped my attention. Thank you for sharing the details. Wow…what kind of bogus ads were they running? Yikes! Moreover, what about the Builder/Contractor/Developers offering incentives, such as home improvement, in exchange for selecting a preferred lender. Isn’t this a case of RESPA being stretched to the outer limits? On another vein, I have heard that 10% of any profession makes 90% of the money; or maybe it is 20% make 80% of the money? Either way, I think perhaps 10% to 20% of most professionals are the best & are likewise compensated. In practice, I suspect this is true. Now, I hear only a small percentage of loan officers have sought their proper licenses. This all leads me to conclude the industry is changing dramatically & the ranks of our colleagues are & will be shrinking. By force of governmental regulation or by sheer attrition, due to declining lending options, the number of loan originators is being reduced today and ever-more. The Linden case serves to under-score the abuses of the past, hopefully these incidents are at least occurring less often. The participants are being weeded out, to the benefit of the public & their peers in lending.

  64. I too agree with the posters here that hope for Linden to get the maximum fine. However, I wonder if that is enough to stop them and other predatory/misleading advertisers from trapping consumers into bad mortgages that are profitable for the advertiser. I am fairly sure that Linden profited far more than $150,000 from their deceptive ads, as are countless other companies out there that are doing the same thing. Hopefully consumers who have been hurt by Linden will take them to court and win, to truly give companies like Linden something to fear when next they make a false advertisement.

  65. I had to take a moment after reading these posts to digest what I was actually hearing.

    People, PLEASE take the time to actually research your concerns… don’t just read one article and trust it as fact. I did a loan with Linden only two months ago, and I couldn’t have been happier with the service. All my fees were typical for a refinance, and I have refered them to countless friends and family.

    I, like you, read the negative comments in the press. I actually did the leg work and found out that these “adds” had been run countless times and been okayed through Fannie Mae. If you actually read the complaint, it’s about the adds themselves NOT the service, and that is why Linden never had to close their doors or surender their licenses. One has to conclude that there is something fishy about them being singled out…the mortgage meltdown means we have to blame someone, and Linden was the designated scapegoat.

    I sincerly hope that future readers form their own opinion, good or bad, through actual research other than this article.

  66. Jillayne:

    Correct me if I am wrong, but I do not believe that Fannie Mae “OK’s” advertisements in advance. I know for a fact that DFI does not.

    Jason, that you even considered using Linden is a testimony to your uncommon bravery.

    What research would you suggest readers undertake to verify that Linden Loans acted legally?

    They did in “in fact” advertise illegally, continuously, in full knowledge that it was illegal (a cursory reading of the FTC handbook on “How to Advertise Consumer Credit will verify that).

    They did “in fact” not deliver the terms in their advertisements as detailed in the Statement of Charges from DFI.

    There is NOTHING fishy about them being singled out. They advertised copiously, and illegally, harming customers and competitors. Then they proceeded to bait and switch nearly all of the customers they lured in.

    I am pleased that you were treated well there, perhaps they have “reformed”.

    Still, it seems wrong to reward a lender for such atrocious past behavior.

  67. Jason:

    It administrative action was about the service.

    The Statement of Charges details the facts pretty well. They consistently advertised “No points and no fees”, yet consisently charged points and fees.

    They may have rendered great service (returned phone calls, closed loans, etc.). Heaven knows they should have.

    However, your definition of great service may differ from mine.

    My definition of great service begins with honoring the original advertisement that brought me into the store, and ends with me leaving with the product advertised, and a whole host of other actions in between.

  68. Yes, Fannie Mae does have to okay advertisments. Where do you think your complaints go? who regulates them?

    My concerns where strickly with the tone of the article itself. Implying that a “Homefree” contest was never actually awarded is off topic and, forgive me for saying so, petty. Speculating with no proof is just another form of false advertisement.

    Look, I encourage different points of view. It’s far more interesting than people believing every peice of crap article they read. Your thoughts here have been well documented and interesting, and you have obviously put quite a bit of research into this, which what I’m asking everyone to do. Too many of the above posts have started with, “Wow, I had no idea about this” only to end with “…and I hope their license is taken away and they all end up in jail!”. These are assinine comments by those who are angry about being misslead? Sorry, but if you don’t see the irony there, I don’t know where you would.

    I would encourage those who read this article to actually CALL Linden…now more than ever. Put them to the test. Take your knowledge of what you read here and compare it to what they are telling you. If the whole point of this article is to enlighten those who have been “wronged”, those who actually care will do this. I did, and it gave me a completely different perspective of the events surrounding this.

    Oh, and I don’t think bad behavior should be rewarded. The problem is, you and I differ on the opinion as to who this person actually is.

  69. Jason:

    You are sadly misinformed on a number of important facts. I cannot allow the discerning readers of this post to get sent off the rails by such gross misinformation.

    Fannie Mae does not “OK” advertisements, nor are they authorized to penalize lenders for illegally advertising.

    The Federal Trade Commission regulates the advertising of ALL consumer credit, at the national level, and the Department of Financial Institutions and the State Attorney General’s Office does the same for Washington State.

    A thorough investigation by the DFI concluded that they advertised illegally. Please bring facts to the discussion, and do your research first.

    You would be VERY hard pressed to find someone better informed than Jillayne in this area, and I have learned from hard experience to do my homework, before questioning hers.

    So far as I know, no one from Linden has sought to defend their actions here, or in any arena except with DFI. If they wish to make their defense public, I would happily read every detail.

    Incidentally, there were shockingly few articles detailing the admin action. Thankfully, there are forums such as these where the story can be kept alive and fleshed out.

  70. so wait…I can’t state my opinion and I can’t question someone else’s?

    Last time I checked, we didn’t live in communist China.

    I am here stating my opinions like everyone else. The point of my even commenting here has been to share my experience which differs greatly from the implications in the above article. I was not taken advantage of, and I enjoyed Linden’s service.

    I never asked people to agree with my point of view, but I certainly didn’t expect to be attacked for it.

  71. Jason:

    Thanks for providing the sole contrarian point of view, even if we disagree. I should have been more gracious.

    Your point regarding everyone chiming in (piling on, really) is probably valid. I think most of them are new to the lending industry (really, there are new LO’s coming in!), and perhaps surprised that you could actually do such a thing. Hopefully, they will not take the wrong lesson (ie., you can violate the law, get caught, and still get borrowers to not only use you, but tell the world how great you are!)

    Hey, come to think of it, that is EXACTLY what the founder of Ameriquest did!

    It’s pretty hard to make a case for defending what they did.

    But there is always the strategy that it’s better to go to banker that just got out of jail, figuring “he’ll never do that again”, as lightning is not likely to strike twice in the same spot.

    However, there is probably research somewhere, that says that it does, both physically,and metaphorically.

  72. Roger:

    Not a problem. Like I said in one of my past posts, I find your knowledge and research on this topic admirable.

    I do stand by my thought that the best way to test this topic is to call Linden directly. If one has concerns about this subject matter, they would be hard pressed to find a better research tool than going directly to the source. This coupled with the above article should give you a fair idea of the “truth”. As we all know, things are rarely black and white, but usually varying shades of grey.

  73. Jason:

    Agreed. Things are not usually black and white, but more nuanced.

    I wish there was more information about the investigation available publicly. I can only offer my opinions based on the public documents, and my insider knowledge of the wholesale lending industry
    that existed at the time the charges allude to.

    I would have loved to be a part of that investigation.

    I would still be of the opinion that calling Linden would be rewarding them, just like responding to one of their ads.

    Of course, since I am in “the biz” I get a little steamed that they (and MANY others) get to benefit from illegal advertising, while my legal advertising dollars are completely wasted.

    Just curious, what made you seek out Linden?

  74. haha, funny you should ask…I sought them out on a referal!

    while I was in the process of looking into a refinance, I did some research on washington state loan originators (well, to be honest the search didn’t start that way, but through various links that’s where I ended..). Anyway, don’t quote me on the statistic, but it said that there were some odd 30,000 registered loan originators in the state of washington PRIOR to them being required to do background checks/testing. The number of loan originaltors in washington now is something like 1900 (I think). Either way, I was amazed (and a bit horrified) to realize that any Joe with a computer could sling loans from his basement. It made me realize how far the pendulum had swung. And now, just like anticipated, it’s swinging to the other end of the extreme.

  75. Hi Jason,

    I’ve been out of the office today but have been following this conversation. It sounds to me like you are a representative of Linden posing as a happy consumer. Consumers don’t generally toss around words like “Fannie Mae” or take it upon themselves to learn and memorize DFI statistics, or take up the cause to argue on behalf of their mortgage broker via back and forth comments on a public blog.

    You are welcome to prove me wrong anytime. I invite you to post a link, or name, address and phone number so readers can verify that you’re not a Linden employee.

    If you do not feel comfortable doing so on this blog, please email or call me with that information.

    Linden has been charged by DFI. The statement of charges are a matter of public record. Linden now has the opportunity to challenge these charges and I understand that they plan to do so. When the final consent order is signed and posted, we will all be able to see the consequences of Linden’s prior actions. Hopefully the consequences will deter other company executives from making the same decisions.

    What would have impressed me is if LInden would have come right out and admited their actions, apologized for the results of their actions, refunded money to the consumers who were harmed, and moved on.

    If you are a real customer, and if Linden does have many, many happy loyal clients, then Linden will survive this unfortunate time in their company’s history and hopefully learn and grow.

    I have met many Linden LOs and everyone thus far that I have met has been good person. However, good people sometimes find themselves in an environment where deceptive advertising is part of an overall corporate culture, which is justified in the name of profit.

    If this is the case, perhaps those good folks will not become victims themselves.

    If I was a consumer seeking a mortgage loan, and met a good LO that worked at Linden, and then found the DFI consent order on my own, I’d ask the LO for an explanation as to what happened, why it happened, and what the company had learned from their experience.

    If the company makes excuses or says “we’re the victim” I would be inclined NOT to believe that company. Finger pointing is an obvious red herring when it comes to personal as well as corporate responsibility, especially in today’s market.

    If you do work for Linden, then let’s do an interview, and I will post that interview as a podcast for raincityguide readers. You can have a chance to share your side of the story, and “talk” to potential Linden clients.

  76. Interesting take, Jillayne.

    It never occured to me that any LO would be as misinformed as it would appear from Jason’s allegations. I assumed that anyone that could become licensed would know the facts about legal advertising and the proper regulatory agencies.

    I probably assume too much.

    And of course, being contrarian myself, rather than follow Jillayne’s lead, I urge the readers to do exactly as Jason suggested: to wit, to call Linden Loans, and ask them why they should indeed do a loan with Linden Loans, despite their illegal past behavior.

    Please do report back with your findings. I sincerely am interested in hearing their side of this story. I don’t think it would help for me to call them, as my fingerprints are all over this post. I could hardly stay anonymous, could I?

    The owners of Linden have wisely chosen not to defend themselves publicy. Not likely to win much sympathy in the press. Better to collect as much money as you can, then slink away.

    (I was going to take another swipe at Roland Arnall, the owner of Ameriquest, but for crying out loud he died today!)

    Guess I gotta stop hammering on Ameriquest now.

  77. A fine line that shouldn’t be crossed was crossed. Misleading and illegal! No matter how fine the line it’s still there and when crossed it’s easy to spot. There add was obvious to me and everyone in the business. Someone saw it, reported it, and now they’re paying. Even if they are still in business they have suffered. In this case if there still in business then we have some toughening up to do!

  78. Rhonda, Jillayne, etc,

    In response.

    “The follow up question becomes, if these homeowners were deceived and are now facing foreclosure, would they be able to bring action against Linden?
    If the answer is yes, then maybe we’ll finally start to see the beginning of the end of deceptive mortgage ads.”

    We can only hope so. Although we all know that ‘if it sounds too good to be true it probably is’ there’s always PT Barnum’s people out there. (There’s a sucker born every minute).
    I live in a very “mixed” neighbourhood with a lot of recent immigrants. Many of these people don’t speak English or only slightly. I feel like they have come here for the American Dream yet these seem to be the people that are often taken in by this kind of advertisement. A.d often the elderly.
    I wish that there was more that I could do to protect these people & I enjoy hearing about groups like Linden Homes getting their just desserts.

  79. I am pasting an email I received this morning from Wendy Pool @ Linden Loans. This is in response to my email to her stating that her “profit-making” fees as listed on the GFE she sent me, were much higher than other brokers’ fees that I had received. After reading her reply, even if she had negotiated a lower fee, I knew her attitude was not one I wanted to be associated with. Rude, arrogant and unprofessional. Read below…

    The only fees that I make any money off of are the 1% broker fee. As I said before the title insurance, escrow closing fee, and the recording fee “are what they are

  80. Vicki:

    I’m curious. What induced you to call Linden in the first place, in light of their legal troubles w/ DFI?

    Not enough info here to really tell if they are over-charging (and if they are not disclosing the YSP, you may not know the full amount of revenue from the loan), but it is true that a lender needs to make some money to stay in business, and in Linden’s case, pay for TV and radio advertising, and legal fees.

  81. Vicki:

    It is also true that title, escrow, appraisal are 3rd party costs, and not largely under the control of the loan originator (although an LO can shop around and negotiate lower fees for you), and do not inure to the benefit of the broker. When using a mortgage broker, there is usually an underwriting fee, and a few other fees coming from the lender selected, these also do not go to the broker.

    When other lenders compete for your business, they may understate some fees, or move them somewhere else, or worse, increase them at closing.

    It is also true that loans have become harder to complete, with guidelines changing almost daily, and underwriters going over each file with the utmost care and diligence.

    Ultimately, the thing that should matter to you is the total cost (exluding prepaid taxes, interest and insurance), the program and the rate, and whether that cost is guaranteed, and whether the rate is locked (and of course, whether the program is a good fit for your circumstance).

    Best of luck to you. Shop wisely.

  82. Hi Vicki,

    Thanks for stopping by RCG and sharing your experience with Linden. I concur with Roger’s observations.

    There are many moving parts to a mortgage. Rhonda Porter has authored numerous posts on this blog and her own helping consumers understand why the loan with the lowest fees or the lowest interest rate may not be the best deal.

    However, it sounds like one of the important considerations in obtaining your mortgage is the relationship between you and the person to whom you are trusting this financial decision.

    Anytime there’s conflict, there’s also opportunity.

    The opportunity presents itself as a way to move closer toward one’s client, or away from one’s client.

    For example, “Although this fee over here is not negotiable, I am able to negotiate this other fee….sounds like low fees are important to you, what else is important to you….and so forth.”

    Something that Wendy points out in her letter is true, however.

    A lender offering the lowest fees might not deliver on that offer at the end of the transaction. Rhonda Porter and others have always advocated getting the loan originator to promise, in writing, that the fees quoted on the good faith estimate will not increase at closing.

    The irony is not lost on me that Linden is the company that is warning you about bait-and-switch tactics elsewhere. I would imagine that today Linden would perhaps be one of the safest places to go to avoid bait-and-switch.

  83. What’s interesting to me is that the 1% broker fee IS negotiable. You can have a higher rate (around 0.25%) in lieu of the point (broker fee/loan origination/discount).

    Since I’ve been at home recovering…I also noticed a Linden tv ad with rates too low to be true yesterday…how can they keep doing this?

  84. Rhonda:

    I also saw that ad, but didn’t have anything to write down the rates (I was working out!). Are the rates for a 30 yr fixed?

    Did you tape the ad?

    In the same time frame I saw 2 different ditech ads, with different rates.

    Man, it just keeps going on doesn’t it!

    We should start a for ads….true, false or unverified!

  85. Pingback: Senator Dorgan’s Office Now Collecting Deceptive Mortgage Advertising | Rain City Guide | A Seattle Real Estate Blog...

  86. One goes down, and another will pop I’m sure. it’s amazing to see why some of these ads are up as long as they are. I understand there are consumers out there that will fall for these ads but still, its just amazing why again, they last as long as they do. Unfortunately, marketing is just getting more clever and deceptive in all industries. It will be interesting to see how mtg lending ads will change over the next few yrs to adapt to lending guidelines. Or maybe they just keep advertising the way they always and buisness as usual?

  87. I find the whole linden tree concept kind of funny–the idea that an unethical company would be named after something reprenting wonderful qualities. You know how they say that apartment complexes are named after the things destroyed to build them (Deer Run, Emerald Grove, and the like)? Maybe it’s like that. 😉

  88. What a great example of deceptive advertising! I loved going back and replaying their ads…especially the audio ad. The APR of 7.88 is shared in the beginning of the ad at such speed, I doubt anyone would pay attention to it!

    I really appreciated what you said in the comments regarding how society wants to believe that such an offer could come with no strings attached. Everyone is looking for a great deal and many people are ready to jump on the bandwagon of any great deal they can find. Without knowledge of how the industry works, those looking for the “great deal” fall prey to predatory lending.

    Years ago, my wife and I refinanced our mortgage with an L.O. that was recommended to us. He had gotten a “great deal” for our friends and we wanted to get a “great deal” as well. He quoted us a great rate and in our naivete, we signed on the dotted line. Why not? Our payments would be lower and we would have more cash in hand each month. It wasn’t until over a year later that we learned that we had signed up for a mortgage with negative amortization. The net effect of the terms was never explained to us and we were horrified to learn what we had gotten into. It was a good lesson to learn but it is just another sad example of predatory lending.

    I wish that reading posts like this was required of all brokers and L.O.’s. Everyone needs to understand what it looks like and how serious of an issue it really is.

  89. In an attempt to avoid all the negative postings on this site and others, Linden Home Loans is now operating as Linden Mortgage. If asked LO are to say that “we are not Linden Home Loans and that we have no relation to that company, from what I understand that company is no longer in business”

    Their business has really suffered since the Bait and Switch action and this is just another attempt to overcome.

  90. Pingback: Deceptive Advertising Update: Linden Home Loans, Paramount Equity and Assurity Financial | Seattle Real Estate ~ Rain City Guide

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