FTC sends refund checks to borrowers duped by mortgage ads

Before you go, we thought you'd like these...
Before you go close icon
Customers duped by a California mortgage broker's ads for low mortgage rates are receiving refund checks from the Federal Trade Commission (FTC).

Chase Financial Funding Inc. -- which now does business under the name Choice Financial Funding and is not related to banking giant Chase -- lured unsuspecting borrowers into signing up for 3.5% fixed payment 30-year loans that turned out to be adjustable rate mortgages, the FTC says.

According to the FTC's federal court complaint filed in 2004, the falsely advertised "fixed payment" loan was actually an adjustable rate mortgage for which the principal balance increased if consumers made payments at advertised rates -- with minimum payments subject to a 7.5 percent increase per year.

The FTC says Chase Financial Funding (CFF) repeatedly encouraged customers to sign applications for loans that were neither offered nor available. The company also issued disclosure statements that misrepresented annual percentage rates (APR) and payment schedules, and misled consumers during the course of refinancing, including regarding prepayment penalties and fees associated with refinancing, the agency says.

The FTC alleges CFF violated the FTC Act by deceptively claiming it offered:
  • a fixed interest rate or fixed payment loan
  • a loan in which payment of the minimum amount specified covers both interest and principal
  • a loan with a specific payment schedule, interest rate, and/or APR
  • a loan with no prepayment penalty or with a prepayment penalty that would not apply if the loan was subsequently refinanced through CFF.
On June 1, 2004, a U.S. district court judge entered a stipulated preliminary injunction barring Chase Financial Funding's business practices. Under the settlement, the defendants (James F. Berry, Suzanne Admire and Jeremy Alexander) made no admission of guilt.

The FTC mailed 261 checks totaling $1,238.35 each on June 30, which are valid for 60 days. The refunds are the result of a settlement between the FTC and the defendants, as well as the recent distribution of the defendants' assets by a bankruptcy court.

Customers of the former Chase Financial Funding who believe they were victimized by the company but failed to complain to the FTC may still qualify for a refund. Consumers who think they may be eligible for a refund or have other questions can contact the claims administrator hotline at 1-877-789-9498.
Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners