A Washington state mortgage broker has been accused of a bait and switch campaign in which customers who were promised a one-percent rate wound up with much higher rates.
Linden Loans LLC advertised a home loan program at “1 percent, with no points and no fees,” but the state Department of Financial Institutions found that “not one borrower actually received those terms in 2006.”
“The 1 percent rate touted by Linden lasts only a matter of months, and requires borrowers to accept predatory loan terms that would greatly increase costs to borrowers,” said Deb Bortner, director of the department’s division of consumer services, in a statement.
“Borrowers who did get the 1 percent rate — only 44 of 333 borrowers — paid fees that in some cases grossly exceeded traditional broker fees,” Bortner added.
Linden is also being accused of violating state mortgage laws by misrepresenting loan terms, omitting mandatory disclosures and engaging in an unfair and deceptive practice.
The company faces a fine of at least $150,000 and may have their broker license suspended for 30 days.
Mark Sullivan, president of Linden, responded saying, “The advertisement referenced has been reviewed by the Department of Financial Institutions several times since June 2006, and has been found with no apparent violation. We were notified this morning that the ad is in violation, and we are working to correct this matter immediately.”