Lenders' Ads Still Target Risky Customers, Despite Credit Crunch

Washington Post:

On AOL.com this week, the Internet-based loan company LendingTree offered "Bad credit options" and a $425,000 loan for only $1,376 a month. And Countrywide Financial, the nation's largest mortgage lender, declared, "Bad Credit? Call Today. Refinance or Tap into Your Home's Equity" in an online ad from its Full Spectrum Lending Division.

No-money-down mortgages and subprime loans that cater to people with spotty credit are quickly disappearing as lenders tighten their standards in response to a rise in foreclosures. But you wouldn't know that if you looked at the ads that some banks and loan companies have placed on the Internet and in newspapers, including this one, often right next to the very stories chronicling the meltdown in the mortgage industry. So what's with the mixed messages?

Read the whole story: Washington Post

Comments

[Manx]

02:26 PM on 08/25/2007

I push the mute button everytime that irritating Countrywide ad is shown on cable TV. The guy featured in the ad with that phony smile looks like he's right out of The Sopranos. How appropriate.

[Jason357]

12:16 PM on 08/24/2007

Let's see , people bitch if they don't have access to loans, then they bitch when they do. I think it's really just a bunch of socialists who think everyone should have access to the exact same loan term, regardless of their ability to pay, just like they want the same health insurance rate for someone perfectly healthy and someone with cancer. Life in fantasyland.

[JScott]

10:59 AM on 08/24/2007

Yup what credit crunch indeed! I still get annoying commercials on TV/radio and see them spread all over the internet, not to mention getting all that crap in the mail (altho I'm not subprime lending material-show's how desparate they are to generate business).
It's as tho NOTHING has changed.

[jsinton]

08:17 AM on 08/24/2007

Of course the banks still go after the risky loans. They don't make money on the people with good credit. They make their money on the people whom they charge late fees.

[vippy]

08:12 AM on 08/24/2007

I don't get it how stupid people are. When they passed the law in Texas that you could borrow against your house I thought it would be
suspicious. When I am being told that I have
equity in my house and when I remarked that it
is no money to me since I would owe in return.
Seems that is too much for people to grasp.

[vippy]

08:07 AM on 08/24/2007

Not hard to figure out that the MAFIA is in charge. Just look at the business practices.
The law is always on the side of the business.
The tax breaks are always for them.
What I don't get is that the people don't catch on? Just listen to when a bill gets passed in congress, who will benefit, never the taxpayer!

[sadnmadinvirginia]

07:00 AM on 08/24/2007

Besides all the continuing problems with mortgage lending practices, I'm quite concerned with the dramatic increase in TV ads for "student" loans. "Borrow 30,000 dollars a year, not pay a dime in interest or payments until after you graduate, etc....etc...." "Now I can get that laptop computer, no worries, no responsibilities, etc...etc..." These ads are targeted to put these students far, far into debt, long before they graduate. At what interest rate?? How much interest accrues?? Do parents, who already have one of those questionable mortgages, just sign on the dotted line as co-signers?? This is all very, very scarey!!!

[nomoredead]

10:28 AM on 08/24/2007

What is really sad is the way the major credit card companies are working their way into Thailand and other Asian countries. They have teaser deals that can get you hooked like, buy an appliance and get a discount if you sign up for a card. I quess they have saturated the US market now are going after the emerging Asian middle class. I really felt like warning everyone I meet on a recent trip to be careful of this epedemic.

[godlessclif]

06:00 AM on 08/24/2007

They are violating David Riccardo's Iron law of wages. Wages cannot fall below subsistence.
No one can work if their wages are lower than their mortgage payment. Even Wallmart will not employ the homeless.

That may be Americas future. Wallmart employees living in the store.

[nomoredead]

10:22 AM on 08/24/2007

Can't you see a situation coming like China has for its employees. Housing will be so expensive, the big guys will have dorms for workers. Didn't slaves have something like that??? I just moved from a very expensive city where the houses were out of reach for basic income people like teachers, police and firefighters, so they are building low cost housing for this sector, so its not that crazy of an idea. The corporations can control you more. Debt, paycheck and housing....."Your not going anywhere! get back to work!"

[FogBelter]

01:38 AM on 08/24/2007

They need rubes opening new loans to sustain the illusion of liquidity in the Markets. Of course the most desperate borrowers are the ones they go after.

The Banks are hosed if consumers stop playing the credit game.

[emerywood]

12:24 AM on 08/24/2007

Maybe the lenders think they are " too big to fail " or if they do fail, it would create chaos and confusion that the economy will not be able to handle.
It is amazing the government is still doing nothing to curb such mortgage loans and stop the con game.

[ie]

12:01 AM on 08/24/2007

As a real estate agent I've been seeing this for a long time coming. The lenders send us e-mails and fliers every day begging us to bring them "risky" business. "100% Investor loans"---WHY? My slogan for the last 24 months has been "fog a mirror? Get a loan!" They should be punished.

[Chris]

08:48 AM on 08/24/2007

IE why shoudl they be punished? Shouldn't the people that overspend and live beyond there means suffer the consequences of their decisions?

Or are you against personal responsibility.

[djthedj]

08:56 AM on 08/24/2007

If you are dumb enough to loan money to people you know can't pay it back, why shouldn't you suffer the consequences? Why is it you brainwashed republicans always think our bankrupt government should bail out corporations that go broke through thier own stupidity?

[mckinley]

11:28 PM on 08/23/2007

Capitol One has a garnishment against my paycheck -- and they have just approved me for a car loan (and not just a flyer in the mail; I called and actually got the approval)...

[Chris]

08:47 AM on 08/24/2007

Car loan is cosndiered a secure loan and therefor they allow greater risk becuase they can always repo your vehicle.

[LibsRHilarious]

11:09 PM on 08/23/2007

How dare people who make 20,000.00 dollars a year not afford to but a 600, 000.00 home.

Along with healthcare and a car- homeownership is a RIGHT.

[godlessclif]

05:55 AM on 08/24/2007

If we gave every family that does not have one a car it would cost less than the bank billionaire bailout, and boost the economy more.

Poor people could take higher paying jobs further from home.

It would generate fewer political campaign contributions however, which is why the government does not do it.

[djthedj]

08:53 AM on 08/24/2007

No, it sure isn't, but tell me, oh brainwashed one, why is it a "right" for the moronic lenders who made those insane loans to be bailed out by our already bankrupt government? BTW, thanks for bankrupting America, you dispicable pile of excrement!

[Desiderata]

10:50 PM on 08/23/2007

I thought Capital One shut down their mortgage division, but their ads are still running on TV.

What's in your wallet?

[conservativeoriginalist]

11:38 PM on 08/23/2007

They're still mailing me offers to buy out my mortgage up to 90% of my home value.

[conservativeoriginalist]

10:28 PM on 08/23/2007

Why are lenders still able to offer these ridiculous loans to "risky customers" during a "credit crunch"?

Because the Federal Reserve has set the precedent to bail them out if things look shaky. Over $50B has been dumped into the banking industry by Bernanke over the past two weeks.

If there is such a fear of foreclosures, why won't the Federal Reserve pay a month's mortgage for middle and working class America? No, they have to give Americans' tax money to the banking industry instead of the citizens who are the source of said bailouts.

Corporate welfare is getting atrocious. There is absolutely no reason to be saving the asses of unscrupulous bankers and investors with the tax revenues of the victims.

What a racket. Corporate America loves the free market until there's a correction, then they muscle their way to the trough for government handouts. Either way, the bankers win, Americans lose.