FTC sends refund checks to borrowers duped by mortgage ads

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.