Monday, August 20, 2007

Surge in subprime advertising?

Back from vacation! With all the problems of the subprime market, is it just me or does it seem like advertising for these horrible loans has actually increased? I cannot visit a single website without seeing an add for a $500,000 loan for $900/mo. or some other such deal. The dancing green aliens and wide-eyed cute animal Flash ads are everywhere. Out of curiosity, I tried clicking on a few but none of them would disclose the terms of their so-called loan without entering an SSN. But it's quite obvious that these are not good loans. The payments they claim would not even cover the interest on a 50 year loan even if I assume a ridiculously low rate, like 1%, with the balances they are advertising. Further, they sometimes include interest rates that are so far below the actual rates being assigned to mortgages it isn't funny.

I wonder why these ads exist, and worse how reputable online news outlets can display them next to an article about someone foreclosing on their house after their 2/28 IO ARM readjusted.

Near as I can tell, every single one of these ads is full of it. So why do they exist, and why are sites willing to display them?

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