The mortgage broker who created the notorious radio ads that refer to the no closing cost loan as “the biggest no-brainer in the history of earth” apparently spent too much time refinancing, and not enough time disclaiming.
According to the settlement announced today, Atlanta-based Lenox Financial violated the Arizona Consumer Fraud Act by failing to properly include a disclaimer in its radio advertisements touting the loans.
Though the promise to offer no closing cost loans was valid, the fact that the ads failed to mention that some applicants might not qualify led to the fine.
As a result, Attorney General Terry Goddard announced that Lenox Financial (not to be confused with Lenox/WesLend in CA) would have to pay a $95,000 fine, and would be required to add a disclaimer to future radio ads concerning the loan program.
Goddard did note that the majority of loan applicants were able to qualify for a no closing cost loan, and that the broker did indeed provide no closing cost loans, just not universally.
“Although they have a good record of providing no-cost loans, some people with less than perfect credit in fact pay fees,” he said.
Jon Shibley, the outspoken president and CEO of Lenox Financial responded to the settlement, calling it “the biggest no-brainer in the history of earth.”
Unfortunately, giving a fine to this broker can be likened to fining Mark Cuban for yelling at a referee during a Mavericks game, and will probably lead to more shameless publicity than anything else.
Shibley is a huge advocate of no closing cost loans, as evidenced by the following blurb found on his website:
“When you talk about no closing cost, the easiest thing to say is: Don’t go and blow six or seven thousand dollars in closing cost and pay some predator thousands and thousands of dollars when you can do the same thing for free.”
According to the Lenox Financial website, the company does $4 billion in mortgages a year, and has saved customers over $200,000,000 in closing costs.
Of course his customers likely pay higher interest rates on their loans as a result, but hey, that’s a no-brainer.