Real Estate Marketing Must Comply to Regulation Z
I received a post card in the mail a few weeks ago advertising a new town home community in Sandy. East Town Village is a development by Trophy Homes and the front side of the mailer said - Own a new home in Sandy for as little as 981/mo*.
I’m always curious when I see a mortgage marketing piece because so many of them violate the advertising section of Regulation Z. This piece was no exception the asterisked note said the following - $981 payment based on condominium purchase price of $162990 and includes a 2/1 buy-down through Copper Mountain Mortgage using Utah Housing financing, OAC. HOA fees and insurance not included. See sales agent for details. Incentive and prices are subject to change or be withdrawn without notice.
Nowhere did this marketing piece mention the APR, a requirement of Regulation Z 226.24 when a monthly payment is mentioned.
What really got me curious was the financing through Utah Housing. The Utah Housing program allows financing for first time home buyers, who fall into a certain income range, and places caps on the purchase price of the home. Exceptions apply for single parents, people who haven’t owned a home for three years and those that are willing to buy in certain areas of the State. Additionally, the program offers down payment and closing cost assistance in the form of a second mortgage.
Essentially, this flyer is very misleading. The payment quoted is based on a program only a minority of people actually qualify for and the 2/1 buydown guarantees rising mortgage payments for the next two years.
It does make sense for builders to market their properties by using a monthly payment. That’s what most customers look at anyway, but for goodness sakes Trophy Homes, follow the rules. Choosing the payment based on the Utah Housing program was also a mistake. FHA has a wider potential client base and better rates than Utah Housing.
For consumers, this example is yet another reason to read the fine print on marketing pieces you receive and ask questions on “special offers.” If it seems too good to be true, it most likely is.