Mortgage Brokers Protest LoansDirect.com Ads
The state’s largest organization of mortgage brokers is threatening to sue Huntington Beach-based LoansDirect.com over an advertising campaign it claims unfairly portrays the group’s members as deceptive and dishonest.
The 1,600-member California Mortgage Brokers Assn. sent a letter to LoansDirect.com President Anthony Hsieh last week asking that the ads be changed or halted.
One newspaper advertisement contains the headline: “You’re not financing a gold mine. So why do mortgage brokers always give you the shaft?”
Lloyd E. Messersmith, the association’s executive director, told Hsieh in an Oct. 28 letter that the ads imply that mortgage brokers habitually promise a favorable lock-in rate and then change the rate to their advantage at the last minute. Messersmith said the practice is neither common nor legal.
“It’s a truth-in-advertising issue, because most of the assertions they make are not true,” Messersmith said in an interview Thursday. “They’ve impugned the integrity of all brokers.”
Hsieh said that executives at LoansDirect.com--formerly known as Tricor Mortgage Lending--will meet with the company’s ad agency and public relations firm to decide whether to keep running the controversial ad.
Ray Kwong, head of Pasadena-based WiseGuys, the company’s ad agency, defended the ads as fair. “There are certain methodologies mortgage brokers are apt to use that keep coming up time and time and time again,” including promising rates that aren’t delivered, he said.
Hsieh said that he hopes to respond to the brokers association by next week, but that he stands by the message expressed in the ad.
“We go through the struggle with borrowers every day on the tricks and traps that mortgage brokers use,” Hsieh said. “What’s important is not our ad, but the reputation . . . [that mortgage brokers] have painted for themselves over the years.”
LoansDirect does not work with mortgage brokers, a setup that removes a layer of fees for consumers, Hsieh said. The company also is not a member of the association.
LoansDirect is among a small group of local mortgage lenders--including DiTech.com and LoanWorks.com--that offer loan underwriting and approval via the Internet. The companies advertise aggressively, employing the now-familiar tactic of publicizing home-loan rates using lighted, digital billboards next to major freeways.
But LoansDirect has “stretched the bounds of propriety,” Messersmith wrote, by stating that brokers lure borrowers with deceptively low rates.
Messersmith said the association’s general counsel is investigating the possibility of suing LoansDirect.com under the federal Truth in Lending Act or state laws governing fair business practices.
