Now here’s something I have to think will be of interest to the White House–you know, the famous one in the Other Washington. A mortgage broker active in the Seattle market is currently running radio ads that include a lengthy sound bite of President Obama during a speech extolling the virtues of mortgage refinancing. The clip goes on and on. I keep hearing it on KOMO News Radio. You’d think Obama himself is endorsing the brokerage.
Which, aside from the fact that Obama has another day job and such things just aren’t done, would be quite a shock. Because the outfit, Paramount Equity Mortgage Inc. and its smooth-talking co-founder and president, Hayden D. (Hayes) Barnard, have, shall we say, a bit of a record in Washington State. A little something about not playing fair with customers–and, believe it or not, running false and deceptive radio ads!
You can find the colorful details on the website of the Washington State Department of Financial Institutions. In 2009 Paramount, Barnard and two other executive owners paid nearly $400,000 to settle administrative charges the state brought a year earlier. The allegations were incorporated in the settlement. One section, entitled, “False, Deceptive, and Misleading Advertising,” said that Paramount had run numerous radio spots in Western Washington making all kinds of claims that weren’t true, like that it was a bank.
Then there was this:
[Paramount] … misrepresented that the interest rate was fixed when it was adjustable, did not clearly and conspicuously disclosure the APR; did not disclose that the interest rate may increase after consummation; and did not disclose the terms of repayment … [Paramount] represented that the appraisal was being offered for free when the cost was being recovered through other charges … Paramount represented that interest rates had reached historic lows, sometimes due to economic conditions. [Paramount] did not maintain adequate books and records required to substantiate the low rate claims.
The settlement went on to say that Paramount cranked out paperwork on loans such that “a significant portion” of the fees the firm received were “hidden from borrowers.”
In the settlement, the Paramount side formally admitted to illegality in record-keeping, loan origination and “some aspects of its advertising.” Paramount and Barnard–who is the main voice in the radio ads other than, now, Obama–say they have cleaned up their act.
Paramount was just in the news hereabouts thanks to a terrific Seattle Times article that Paramount provided abusive refinancing to the family of Robert Bales, the Seattle-area-based Army sergeant facing charges he murdered 17 civilians in Afghanistan. The story said Paramount in 2006–before its settlement–put the family “into two loans considered ‘subprime,’ with high interest rates, prepayment penalties, and balloon payments, records show.” The article quoted the former head of the Seattle Mortgage Bankers Association as calling the loans “unconscionable.” Paramount denied its lending was predatory.
To me, it’s possible the Bales family was mainly the victim of extremely bad timing; in 2006 real estate prices were peaking and about to topple, meaning that turned out not to be a good time to leverage up. But I’d say Paramount still has to work on the advertising part. Another take-away from the Obama ad–certainly for me, being New To Seattle–was that Paramount is a local company. Actually, it’s based in Roseville, Calif., a suburb of Sacramento, and operates in a number of western states. For all I know, the Obama voice-over is running everywhere. (According to a press release, Paramount last year sold part of itself to international infomercial marketer Guthy-Renker LLC, which itself seems to draw a fair amount of criticism.) Barnard himself grew up in St. Louis, Mo. and is a Mizzou grad.
As always, I invite anyone mentioned in this story or any reader to comment below.
I have a confession to make. Unlike many goo-goos, I love negative political advertising. The back-and-forth shakes out the truth, livens up campaigns and is just so entertaining. So I hope the Paramount ad featuring Obama stays up long enough for the Romney folks to make some hay by saying the White House should have done something about it. I can just hear that slow-talking Republican voice-of-doom fellow now: “While professing concern for middle class Americans, Obama allowed his voice to appear on ads for a lender found to have deceived its customers …”
Except that I have a funny feeling that Paramount ad is living on borrowed time.
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