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MORTGAGE REDUCTION - MISLEADING MARKETING

Source: www.consumeraction.org.au
Topic: Mortgage Marketing

Sort Desciption: about all mortgage reduction marketing. This paper focuses on the first three features of mortgage. reduction. 2 The Line of Credit Hoax. True or False? ...

Content Inside: CONSUMER CREDIT LEGAL SERVICE INC. MORTGAGE REDUCTION - MISLEADING MARKETING A REpORT TO ASIC by CONSUMER CREDIT LEGAL SERVICE The Consumer Advisory panel of the Australian Securities and Investments Commission (ASIC) funded Consumer Credit Legal Service to produce a case study report for ASIC on debt reduction plans. This report was provided to ASIC in March 2004. We also provided ASIC with a list of websites that appeared to promote the concept of saving thousands or cutting years off your mortgage by using a line of credit. We have not included this information which identified particular businesses here. However an indication of the extent of this form of marketing can be gained by searching key words such as cut years off your mortgagewithout extra repayments and similar phrases. Since this report was originally provided to ASIC there have been numerous articles warning consumers of the traps of this form of marketing including a warning by ASIC. See: http://www.asic.gov.au/fido/fido.nsf/byhea dline/Line+of+credit+mortga ges?openDocument Roslyn Hunter and Carolyn bond Consumer Credit Legal Service Level - 9 bank place Melbourne Victoria 2 CONSUMER CREDIT LEGAL SERVICE INC. September 2004 1 INTRODUCTION Terms such as mortgage reduction or mortgage minimisation are commonly used by some in the finance sector. While there is no clear definition of these terms our casework suggests that they refer to a financial plan that involves: . Refinancing of a mortgage (usually with a line-of-credit); 2. paying salary(ies) into the line-of-credit; 3. Increasing payments on the mortgage (whether this is drawn to the borrowers attention or not); and 4. In some cases consolidation of other debts. See AppENDIX 2 for a Credit Helpline FactSheet that explains why borrowers should be cautious about all mortgage reduction marketing. This paper focuses on the first three features of mortgage reduction. 2 The Line of Credit Hoax True or False? you can cut years ...

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