Over promise and hope it happens - a question of ethics

Real Estate Technology with Content, coding, marketing, host.

Lani Rosales and the folks at Agent Genius started it. I swear. If you don't believe me visit the networked blogs Facebook post for the AgentGenius group. So let's talk a little about ethics in advertising...

One would think the average American would know when they are reading a line of advertising and be able to seperate it from a statement of fact. Additionally you would imagine there would be a stronger desire to advertise one's abilities and offerings more accurately in light of the recent changes to how the Federal Trade Commission is looking at every form of advertisement including blog posts.

What about making claims that are true but make it appear as though the person or company presenting those claims are somehow better than their competitors? Is that illegal, unethical or immoral? Why don't you be the judge.

ethics in mortgage advertisingFor several years a particularly foul mouthed mortgage broker (a very successful one by the way) has shouted about how crappy everyone else in the industry is and how his company does something very well. The insinuation is that no other company does this and I do believe in fact I once heard him say he "invented" or "pioneered" the tactic. The end result and what he states are what could be damning.

His claims were that he would refinance your home "many times" to get you the best rate and that it would "never cost you one thin dime". Wow! Amazing! This dude and all of his people work for absolutely free just for you! Of course just a couple of years ago he also had an ad (which immediately followed the no closing costs home loans spot) looking for top performers who wanted to make $300,000 or more per year.

Sure, that refinance didn't cost the borrower one thin dime. It cost them thousands of dimes.

We all remember Countrywide getting hammered by Chuck Schumer calling on the FTC for almost exactly the same thing so this particular person stopped those ads for a while but they are again now being heard. "Schumer said television advertising by subprime lenders such as Countrywide and LendingTree makes no mention of the pitfalls and current dangers of taking out subprime and variable-rate loans. Schumer also announced what he called a plan 'to crack down on potentially false advertising by lenders' and called on the Federal Trade Commission to immediately issue a widespread consumer alert to help potential homebuyers avoid misleading advertising and loans."  (TimesUnion.com)

We joked about it, "No one can do you like Countrywide". (Remember the distinguished, gray haired fellow who said, "No one can do what Countrywide can." A - it was a lie and B - in retrospect that was a good thing. The Attorney General of California agrees.)

Some months ago there was a challenge issued to a loan officer who had a little ad here on Active Rain claiming 15 minute approvals with no qualifying what he meant by approval. Here again anybody with access to DU can get an "approval" in 15 minutes but it comes with at least a dozen stipulations that must be met for a true and final approval. He conceded that was misleading and changed (then removed) the ad.

Sure, it's just symantecs. That's the point. People are easily misled and the people who mislead them may or may not be displaying the highest integrity.

Right now there is a mildly heated back and forth by one company's claims to be able to "guarantee ten day closings". Once again anyone in the industry automatically knows there are caveats and without even asking I can already know that's from the time they receive the full loan package with all documentation. Easy - my company and a thousand others can do that all day long.

The impression advertisers (people) like this project to the public is they are the only ones who can accomplish this feat. Playing back into the AgentGenius original blog post about so many agents being Number One.

So here is your question and yes, we all expect your input because it is important: Does this, in your opinion, violate ethics?

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I started writing on Active Rain in 2006 when I was representing the mortgage industry. I am no longer in that industry and many of the older posts contain outdated information. Please do not contact me for LENDING or MORTGAGE questions but rather contact a licensed mortgage professional from your area. I have always been in marketing and branding and that is still what I do. Thanks for reading!

Comments (51)

Melissa Zavala
Broadpoint Properties - Escondido, CA
Broker, Escondido Real Estate, San Diego County

Ken: I'm trying to figure out what specifically you are pointing to on the Agent Genius page. Could you email me a link? Just curious. Thanks

Feb 06, 2010 01:10 AM
Jenna Dixon
Momentum Real Estate Group LLC - Marietta, GA
55 & Over | New Constructions | Horse Farms

I actually went so far as to record a TV commercial produced by a lender (i think they are out of business now, or have at least changed their name to protect the guilty) so that I could pause the commercial on the disclaimer screen for my clients to be able to understand that the advertised 3.75% interest rate was a teaser and not something that they could qualify for.

My motto is do the right thing, tell the truth, and NEVER WEAR ORANGE!

Feb 06, 2010 02:04 AM
Nevin Williams
Fairway Independent Mortgage Corporation - Cary, NC
Senior Mortgage Advisor

Ken - I think ethics will vary because it's a moral perspective. Unless of course it is extreme. Hate to say it but what is okay with one person is not with another.  Some view it as heinous deceptive advertising and others see it as a marketing opportunity to peak interest and make the phone ring.  For me I would rather be honest.  If I write blogs and advertise honestly then I have a huge library of facts not a library of hype.  I think these folks haven't embraced the fact that they are marketers first and loan officers second.

Feb 06, 2010 02:11 AM
Brian Madigan
RE/MAX West Realty Inc., Brokerage (Toronto) - Toronto, ON
LL.B., Broker


You raise some excellent points. One of the high flyers in our area is finding that the claims from the unsatisfied clients are mounting up.

Eventually, people who use this untruthful series of half-truths get caught.


Feb 06, 2010 02:18 AM
Ken Cook
Content, coding, marketing, host. - Marietta, GA
Content Marketer/Creator

Don - I used to believe karma always worked. The truth is it doesn't. At least not in this life. There are people who go through life dancing on that thin line.

Susan - do you think the definition is really different for them or are they just pushing it to the limit?

Bryant - I hear ya. What about REALTORS(R) who tell their clients there are multiple offers on a property when in fact the current offer will be the second? Or those who tell the loan officer there are families living in motels/out of moving trucks when nothing is true about that?

Clark - to the point.

Lenn - is there a difference between saying "we are the best thing since sliced bread" and implying "we are the only ones that are the best thing since sliced bread"?

Bob - all three rings I believe.

Jeff - but what about disclaimers? I know I can close a loan the same way the "no brainer" guy can. I also know we close almost every completed loan within about 2 days - once we have all the stips cleared. Why can't I say "48 hour loan closings guaranteed" then disclaim it to say once all the stips have been cleared and the package is in the hands of the underwriter?

Renee - it does affect everyone in the industry, doesn't it?

Gomillions - what if it's the truth just painted in a way to effect the appearance of reality?

Richard - innocent people drown in water, too.

Frank - my brother.

Joseph - I don't want those phone calls (lawsuits) even alleging misrepresentation.

Terri - how hard is that, eh?

L&L Kratz - what is a "Certified Negotiation Expert". Sorry, just never seen that before.

Vickie - doesn't frustrate me :) I'd rather do no business at all that do business I gained by misleading people. And, unfortunately, people who do quite often win all the way through life and leave a trail of disappointment behind them as they ramble through life.

Chris - I like that.

Lane - that's certainly where Countrywide crossed the line back in 06 and 07 by actually saying, not just implying, they could do things no other lender could do. (What they should have said was "Countrywide, we do things no one else should do".)

Jason - Cynical is a nice boat to sale around on. I've been on that ship for many years.

Gary - as you may have presumed your back and forth on that Facebook page is what inspired this post.

Katerina - agreed all the way around. We do try and keep our own industries responsible. When the "ethics offender" is confronted you can always tell they know they are in the wrong because they will either make a joke about it or lash out. It's the customer, the ones who keep us doing what we do, who is deceived in the end.

iTexas - there are people who don't get it that way. They think if they did it once they can say that's what they do.

Ruthmarie - and that serves your community well.

Sue - as an old song says of [customers] just looking for the truth, "We're so easily led astray".

Tony - exactly. Most direct lenders and even a few brokers are closing within that time frame from the date the full package with all stips addressed is received. It's no major feat at all. So is it a violation to present it in a manner that implies (or directly states) being able to do so is unique to one or a few companies?

Mark - should be the same for everyone. Like buying homes, though, people only finance once every few years and lenders, like agents, realize this. So if you tick someone off a little but don't violate any laws, who cares, right? They won't be back for 5 to 7 years anyway. (I actually heard someone say that a few years ago.)

Claudette - I love your last sentence. It is true, if you're truly good other people will spread that news for you.

Tim - Advertising 101: Play to your strengths and/or your competitor's weakness. As you have stated this is not unethical. Where it crosses the line is to actually say you are the only person (and maybe even to say you are one of only a few) who can do these ordinary things. Countrywide was the most blatant when they actually claimed to be the only ones. The racket and rip-off guy never says he's the only one but he does call virtually every other mortgage broker a racket and rip-off. That's just low life sleaze. Not illegal. These "ten day guarantee" (and I know and respect them by the way) only come close to saying they are among a select few - when that isn't actually true and they provide no evidence of it. If they asked me if I thought they should word it the way they do I would tell them to lose the statements indicating they may be special because of it. Just saying they can do ten day closings and guarantee them is good enough. But they didn't ask.

Markita - that new NMLS licensing will definitely make a difference. But there will be those who still shoot for the gutter.

Joe - you make a good point. If someone is deceitful enough to walk that close to a lie or actually lie in an ad what makes us think they are going to have our best interest at heart when we hire them?

Melissa - the activity is in response to a link titled "Do You Need a Trophy Case For Your Meaningless Accolades?" on the Facebook page I gave the link to above not on the Agent Genius site directly.

Feb 06, 2010 02:58 AM
Xposure Real Estate Photography (Western North Carolina)
Xposure Real Estate Photography - Asheville, NC

It is only a matter of time before misadvertising catches up with you and the consequences can be huge.  Being truthful and not using sneaky tactics will go far.

Xposure Real Estate Photography -- www.PropertyXposure.com

Feb 06, 2010 02:59 AM
Bill Gillhespy
16 Sunview Blvd - Fort Myers Beach, FL
Fort Myers Beach Realtor, Fort Myers Beach Agent - Homes & Condos

Hi Ken,  Clearly crosses over the line for many of us here.  However, it affects all of us because we are judged by these idiots.

Feb 06, 2010 03:27 AM
Karen Fiddler, Broker/Owner
Karen Parsons-Fiddler, Broker 949-510-2395 - Mission Viejo, CA
Orange County & Lake Arrowhead, CA (949)510-2395

The sad thing is that so many people are desperate....and so they WANT to believe. I know they have a voice inside which warns them of the over-promise....but they don't want to hear it. It gives them just a little more peace of mind, even though it's false. And ethics? Yikes....of course it's wrong.

Feb 06, 2010 04:54 AM
Ken Cook
Content, coding, marketing, host. - Marietta, GA
Content Marketer/Creator

Jenna - it has been said you'll get more truth by ignoring the big print and going straight to the small print.

Nevin - agreed. I think what started this (from that post on Facebook) is a result of good marketing. Like I said in one of the comments I would have advised the guy who wrote it (and I do know him and respect him) that he was dancing toward that line of misrepresentation. The others mentioned, however, crossed that line and simply lie or lied.

Brian - even if they don't "get caught" in the major legal sense we know intelligent shoppers get it.

XPosure - I think many of us agree with that. By the way, placing a link inside a comment on blogs is considered, by most, to be unwelcomed. Your signature should be your only link.

Bill - we are all judged by what others do. That's one reason why there are so many laws "to protect the ignorant from the unscrupulous".

Erica - that was addressed a few times in the comments. We actually talked about ads that actually claim to be able to offer something others cannot offer. And we talked about advertising 101 - so I do agree with you.

Karen - it's what makes them so easily mislead.

Feb 06, 2010 05:03 AM
Ken Cook
Content, coding, marketing, host. - Marietta, GA
Content Marketer/Creator

Erica - you should market your strengths - honestly and with the highest integrity. Not doing so is not marketing well. In fact there is a trend to attack people for being experts. I don't like that trend. In fact I haven't spent thousands of dollars on education, thousands of hours working with clients and closing in excess of 3,500 loans to not be able to be considered an expert. What we are discussing here is people who claim, or make it appear as so, they are the only one or a member of an elite group which does not exist.

Try this: There's a huge development of over 500 homes. Because it is so large the builder chooses 3 lenders to finance the homes. Each of them receives the title "Gus's Crossing Preferred Lender". Two weeks later one of the lenders hears from an agent they will have to take their customer to another one of the lenders because the flier picked up by the customer which plainly reads, "THE PREFERRED LENDER FOR GUS'S CROSSING" and just below says, "Seller contribution of 6% only when the mortgage is financed by the preferred lender of Gus's Crossing".

The discussion is not about the lender who would say "A PREFERRED LENDER" but about the one who says "THE PREFERRED LENDER". This could also apply to the hundreds of agents who can say "ATLANTA'S NUMBER ONE AGENT". And that's where the Agent Genius post and link on Facebook lead to this discussion.

Feb 06, 2010 05:57 AM
Ted Tyndall
Davidson Realty Inc. - Saint Augustine, FL
I will help You find the Home YOU want to Buy

Ken, very well written. It definately gors against all we stand for.

The bad part is ethics should be part of your peronality and not a law we abide by.

Feb 06, 2010 08:33 AM
Gene perez
Greater Mortgage Solutions & Valley Hills Realty - Santa Maria, CA

there are still misleading ad out there and there are still many people out there over promising ,,,sad but true

Feb 06, 2010 08:46 AM
Andrew Jones
Horizon Pacific Realty - Los Angeles, CA
LA Beach Cities Homes 310-399-3740

Hi Ken,

It's interesting that you chose refinancing 'puffery' as your example. I don't think I've ever seen a refinancing ad that says 'This is a new loan, all interest paid on your old loan is forfeit.' You might see a lot less refinancing.

Feb 06, 2010 12:39 PM
Mark Montross
Catamount Realty Group - Burlington, VT
Listing and Buyer Specialist

Its gotten to the point that I barely ever believe what I read any more.

Feb 06, 2010 12:44 PM
Cari Anderson
Danville, CA

The only words we live by are "Under Promise & Over Deliver".  That is all we have control of.  Too many things can go wrong in the transaction and Cari & I take every step seriously as the last.  It is never over until the escrow is closed and even after that many questions arise that we need to answer for the client.  I hate having to "eat crow" and by working under the premise of the above quote I hope to avoid it. ~ Doug

Feb 07, 2010 05:18 AM
Aaron Silverman
SuccessfulRental.com, Bluewater Property Management, LLC and Lowcountry Turnkey Properties, LLC - Charleston, SC
Improving Real Estate Experience through Education

Yes.  I am a Real Estate Investor, and I am bothered by some Real Estate Investor ads. Some claim they can buy your house in one hour or can buy it in seven days or less for all cash.  What they forget to mention is these timeframes only happen if the home meets a long list of criteria which very, very rarely happen.  

Feb 07, 2010 06:54 AM
Kathy Nielsen
http://atlantahomestaging.net - Marietta, GA
Atlanta Georgia Home Stager

Ken - another incredible blog and congrats for the feature.  Now... knock it off.  I'm trying to catch up to you in AR points and I can't if you keep writing informative blogs (smile).


Feb 07, 2010 07:27 AM
Wayne B. Pruner
Oregon First - Tigard, OR
Tigard Oregon Homes for Sale, Realtor, GRI

Advertising has been stretching the truth for years. I had to teach my kids that truth and advertising are not the same thing.

Feb 07, 2010 02:58 PM
Home Loan Search.Online
Home Loan Search Online - Newnan, GA

I am working with a first time home buyer that received a "worksheet" from a large TARP bank. The buyer looked at the worksheet and noticed not the terms but the small print at the bottom that said it wasn't an estimate and that she would have to pay an application fee before they would give her a good faith estimate.

It looked like a bait and switch to the both of us. 

Feb 11, 2010 01:01 AM
Gerry Suarez Jr.
New American Funding NMLS 6606 - Orlando, FL
FL Mortgage Guru

Wow I guess I get to share room at that so exclusive "top" because I too can close loans in ten days!:)


What is sad is when you promote yourself by guaranteeing what should be an industry standard. Whoever cannot close a conventional or FHA loan, once they have all the required documentation with no delays, within ten days shouldn't be in the industry.

Great post Ken. Thanks for reminding us how important it is we police ourselves and try to educate the consumer so they can make a smart buying decision, instead of buying based on empty "guarantees".

Gerry Suarez, Jr.

Your FHA Loan Pro!

Feb 13, 2010 12:12 AM