Ad spending by lenders persists

Updated: Feb 26 2008, 07:35am hrs
The mortgage market may be in a historic upheaval, but mortgage companies continue to pump out upbeat advertisements. Countrywide Financial brags in its ads that No one can do what Countrywide can and that Countrywide can show you the way home. Bank of America says, Homeowner-ship is the best medicine and Wachovia ads feature an Approved stamp at the top.

Also, the National Association of Realtors is running national television ads saying there has never been a better time to buy a home. Home values nearly double every 10 years, the commercial claims, showing a young couple walk up to their white colonial-style home.

Despite rising foreclosures, lawsuits and investigations by state and federal regulators, the mortgage industry has not reduced its ad spending.

Mortgage experts say spending will be strong into the spring, a prime buying time for the housing market. But consumer advocates say the ads continue to be misleading.

Theres been huge scrutiny on these companies, but they continue to advertise, said Sally Greenberg, executive director of the National Consumers League, a nonprofit organisation. Many of these companies are bleeding, and these ads are a way to get more money into the door.

Indeed, the Mortgage Bankers Association is predicting this will be a down year for the industry, and it said that the total value of mortgages produced would be down 16% from its level last year. Mortgage companies spent nearly $409 million on ads in the third quarter of last year, higher than the industrys ad spending during the peak of the housing boom, according to TNS Media Intelligence. Mortgage ads can easily be found in all types of media outlets, and the ads cited in this article were found by Competitrack, a company in New York that tracks advertising.

There may be some good, legitimate offers, said Frank Dorman, a spokesman for the Federal Trade Commission, which monitors advertising for deception. But its a good time for consumers to be wary.

NY T / Louise Story