Mortgages Are Disappearing But The Advertising Isn't

Even as lenders face bankruptcy and banks are closing down their mortgage divisions and cutting jobs, the advertising for subprime and non-conforming loans is still going strong. What’s the deal?

From the Washington Post:

Even though dozens of lenders have shut down their mortgage operations or laid off employees, many others are trying to generate interest among potential borrowers even if the companies ultimately cannot qualify them for loans.

“It’s important to point out that there are loan options available for borrowers with lower credit scores in today’s market,” Darren Beck, senior vice president of marketing for, said in a written response to questions.

So is it wrong to market no-money-down, interest-only or other alternative mortgages to people with poor credit?

“There’s nothing necessarily wrong about lending money to people with bad credit,” said David Nahmias, U.S. attorney for the northern district of Georgia, who has worked on mortgage fraud cases. “Our concern is more the independent mortgage brokers who will try either to trick people into purchasing properties they really can’t afford, solicit those people to lie, let them use their identity or credit so they can perpetrate mortgage fraud.”

Yes, those are our exact concerns as well. People with bad credit deserve a second chance—to buy a house they can afford.
That last part is important.

What Credit Crunch?
[Washington Post]