Advertising Compliance – Dodging Bullets

I remember the good old days when I was blissfully ignorant about everything except making the next car deal.
Back in the days when I was a dealership general manager, I couldn’t wait for the next big sale, promotion, mailer, etc, whatever it took to make things happen. I gladly signed up for whatever “Next Big Thing” my boss was willing to pay for. After all, we had to keep the staff pumped up and the customers coming in, right?

Well, since then I’ve learned a thing or two about compliance and now realize that many of the programs we participated in were questionable at best or downright misleading (and thus, illegal) at worst. I never gave those advertisements a second thought because I figured we paid the program vendors a lot of money so they must be legal and proper, right? And even if the ads were improper, the vendor would be responsible, not us, right? Ah, wrong and wrong.

There was one program that we did that still gives me night terrors when I think about it. I was GM at a dealership that was part of a group in California and I got the word from the corporate office that we signed up for a promotion with a company from another state. It went something like this: the company sent out mailers which were simulated newspaper ads with my picture and all kinds of exciting quotes from me about this amazing sale we were putting on. Now the really exciting part was that these ads were mailed to people in hand-addressed envelopes, so they were more likely to open it. When the addressee opened the envelope, he or she found the “newspaper ad” with a Post-it note stuck to it signed by “J”, an apparent friend of theirs who saw the ad and thought they would be interested.

I loved it! I thought this was a great marketing concept. Everyone knows someone with the first initial J, so it had a certain degree of credibility. Of course, a few customers were a bit savvier and called the dealership to express their disgust with our “sleazy tactics”, but I digress.

At any rate, I was excited, the staff was excited, and, not surprisingly, the promotion did quite well. So, what’s the problem?

Well, the ad was “questionable” in all kinds of ways, such as:

• Proclaimed that the dealer “used $23 million from 18 banks to revive the local credit market during this sale” and that we had a “partnership local banks for a special credit and pricing event” – sorry, but we didn’t have any deals with any banks for any amount of money.
• Stated that these “banks” were offering us “preferred terms that our competitors couldn’t match in this market” – yeah, sure…
• 3.9% APR available on certified pre-owned vehicles – too bad we didn’t have any CPO cars…
• Vehicle payments advertised that virtually no one would qualify for: 60 month financing on an 8 year-old car with $29 down and an amount financed of less than $5,000… Good luck with that. (I don’t know, maybe one of those 23 phantom banks that I allegedly hooked up with would have done that kind of a deal?)

As far as I’m concerned, I – and the dealer – dodged a bullet with that ad. The worst part, of course, being the “I” part. My name, my picture and my “quotes” were all over the ad. Was I potentially liable for any violations? Heck yeah!

Advertising is considered deceptive if “members of the public are likely to be deceived” or the advertisement has a “tendency or capacity to mislead the public”. If an ad is deceptive, an advertiser has liability regardless of whether there was intent to deceive. A dealer has the duty to investigate the accuracy of any statements made in advertising. You should never assume that advertising agencies or representatives know all the laws and regulations governing advertising compliance. This is particularly true of companies based in other states, such as internet and direct mail providers. State advertising laws are very stringent and the responsibility for compliance lies with the dealership, not the advertising agency.

Bottom line: Be careful when advertising. If you’re not sure about an advertisement or promotion, it’s a good idea to have an attorney look it over. It’s probably better than trying to dodge those bullets.

Interview With Adriana Dodge, Author of A Millionaire’s Real Estate Secret

In over three hours of conversation with Adriana Dodge, author of A Millionaire’s Real Estate Secret, she never failed to have some thought-provoking ideas great for entrepreneurs in all endeavors, especially those looking to get more involved in real estate opportunities.

Question: What does ‘success’ mean to you?

Adriana: 1. Successful relationships with others 2. God active in my life 3. Financially free to do whatever, whenever 4. Feeling at peace. That’s my definition of success, and each person should have their own.

Q: How important is a person’s ‘Why?’ to achieving success?

A: It’s a MUST. When you have a vision, you will go the extra mile and do whatever it takes, legally, morally, and ethically, to pursue your success. Really, when the passion is big enough in your heart, the facts don’t count!

Q: What holds people back from achieving the success in real estate they dream about?

A: Fear. Fear of the unknown. The ‘I don’t know’ fear. ‘I haven’t bought properties before.’ ‘I don’t know if I can be a landlord’. ‘I don’t understand numbers’. Those beliefs. Basically, it’s a lack of confidence in themselves and it’s harder when you can’t recognize opportunity when it’s in front of you. That’s a lack of training, too. Fear can stop the most knowledgeable, experienced investor, but it lessens [with training and experience].

Q: What advice would you give to aspiring Real Estate investors?

A: Take Action First! Call people and negotiate deals. Ask the questions you don’t want to ask. Visit properties and really learn one neighborhood. Always be talking to other investors. Study, learn, and go to seminars. Get a mentor. This can help successfully master fear.

Q: What should a mentor do?

A: They should teach us to fish, not just provide deals. Deals too, but they should give us the ability to recognize opportunity ourselves and encourage our own decision-making. Give examples and scenarios, and show us how to mentally rehearse transactions. Challenge us, push us to take action, and be there to say ‘I understand what you’re going through’. They should force us to take on the mindset of an investor by teaching us to put aside the emotions and learn to look at the numbers.

Q: What are your thoughts on property management?

A: The most important thing in property management is a very tight lease. Tell people their responsibilities up front. They can choose your home or not. Treat tenants with respect and with a customer service attitude always. Take care of things immediately; use contractors and vendors who keep their word-they are an extension of the landlord. When people can depend on us as landlords, who are their friends going to call?

Q: Is there any legitimate reason, limitation, or disability that you can think of for someone in this country NOT to achieve financial success if they truly pursue it?

A: There is absolutely no excuse. Anyone in the United States who wants to succeed will succeed. All it takes is a decision and taking action until you reach your goals.

She then laughed, adding: “If I can do it, think of the possibilities for someone who is smarter, taller, and prettier!” I couldn’t have said it better. I hope you enjoyed looking in on my interview with Adriana Dodge, author of A Millionaire’s Real Estate Secret.

Foreclosure – Dodging the Sword

Like “the Sword of Damocles,” the threat of foreclosure hangs over any mortgaged home until the mortgage is paid off. Fall behind on a few mortgage payments and your mortgage lender could foreclose.

Foreclosure is the process by which a lender or mortgage company vastly accelerates the monthly payments into one lump sum; declaring the mortgage immediately due in full. If you can’t pay the entire cost of the mortgage at the time of foreclosure the lender can seize your home and resell it.

If your former home is resold for less than the cost of your mortgage at foreclosure you’ll be responsible for the remaining unpaid balance. You could end up homeless, in further debt and have your credit destroyed – all in one fell swoop.

Despite the grim possibilities surrounding a potential foreclosure, don’t panic if you think you may miss a mortgage payment. Even if you’re in a financial slump there are many things you can do to avoid foreclosure.

The first thing you should do is consult with an attorney to find out what your legal rights are. You may need legal representation to ensure your rights are upheld. You should also contact the U.S. Department of Housing and Urban Development (HUD) at 1-800-569-4287. HUD can provide you with the phone numbers of many reputable housing counseling agencies. The agencies can give you vital information on housing assistance programs offered by the government, private institutions and community organizations.

Luckily for borrowers, most mortgage lenders don’t like to foreclose on homes. If your home is repossessed the lender takes the risk of not recouping the full mortgaged value of the home at resale; a prospect no lender looks forward to.

Before you ever acquire a mortgage you should find out if any of your potential lenders will be flexible with you if you ever end up in a financial crisis. The best lenders will work with you to help you get back on track and start making regular mortgage payments again.

If you end up having difficulties making your regularly scheduled mortgage payments you need to reply to any and all letters the lender may send you regarding the status of your loan. Ideally, you should contact your lender as soon as possible if you have any problems making your mortgage payments. Request the contact information for the lender’s loss mitigation or foreclosure department for further assistance.

If you can provide documentation to support your claim of financial hardship your lender may be able to provide you with some alternatives to help you get back on track in paying off your mortgage.

Some of these alternatives include:

Repayment Plans

If you qualify for a repayment plan, your lender may allow you to add a percentage of your missed payments to your monthly payment once you resume making your regularly scheduled mortgage payments.

Mortgage Modification

If you qualify for a mortgage modification you can refinance your mortgage, extend the term of your loan or both. This will allow you to pay lower monthly payments.

Special Forbearances

If you qualify for a special forbearance you may be able to reduce or even suspend your mortgage payments for a few months. You may qualify if you lost your job, have your income cut or your living expenses drastically increase.

Partial Claims

If you have a mortgage insured by the Federal Housing Administration (FHA) or Veterans Administration (VA) and your loan is between 4 months and 1 year overdue, your lender may file a partial claim with HUD. You may qualify for an interest free loan to pay off your late payments if you can afford to resume regular payments. HUD will place a lien on your home for the amount of the loan, payable when you either pay off your mortgage or sell your home.

Whatever you do, don’t move out of your home if you’re having problems paying off your mortgage. You may be disqualified for payment assistance if your home is considered abandoned.

If you end up way over your head financially and won’t be able to save your home, even with assistance, you can minimize the financial damage of foreclosure proceedings by doing one of the following:

Holding a Pre-Foreclosure Sale

If you qualify for a pre-foreclosure sale you can try to sell your home for fair market value and your lender may forgive any remaining mortgage balance if your home sells for less than you paid for it. HUD may reimburse the lender if you qualify for a pre-foreclosure from the agency. To qualify, your mortgage must be at least 2 months overdue and your income must be cut or your expenses increase due to no fault of your own. Under a pre-foreclosure agreement, you may have anywhere from 3 to 5 months to sell your home before foreclosure takes place.

Giving Back Your Home

If all your available options have failed you may qualify for giving back your “deed-in-lieu of foreclosure.” You will lose your home but your credit won’t be as negatively impacted as it would if a foreclosure took place.

Whatever you do, you should explore every available option to avoid foreclosure on your home. If you can’t “dodge the sword” of foreclosure, the consequences may negatively impact your life for years to come.