The proposed settlement would prohibit FirstPlus from misrepresenting its loan products, and would require the company to use reasonable assumptions when creating savings comparisons, and to fully disclose all information necessary to evaluate those comparisons. FirstPlus is a consumer finance company offering a range of credit products. HLTV loans are typically second mortgage loans that, in combination with the first mortgage, can exceed the value of the consumer's home. HLTV loans generally are made to creditworthy individuals who have little equity in their homes. Such loans often have a higher interest rate than other second mortgage loans.
Consumers lose money and confidence, and the offending industry loses credibility and customers.
The complaint alleges that the examples shown in FirstPlus ads did not accurately illustrate the potential monthly savings. In addition, the complaint alleges that FirstPlus represented that each recipient of FirstPlus's solicitations who applies for the loan advertised will receive such a loan, when, in fact, that is not the case. Further, the complaint alleges that advertisements for FirstPlus's loans claimed that consumers would receive funds for the full loan amount stated in the advertisements. In fact, according to the complaint, in many instances, consumers did not receive the full loan amount, because FirstPlus deducted substantial origination fees and closing costs from the disbursed funds. Under the terms of the proposed settlement, FirstPlus would be prohibited from making the kinds of misrepresentations alleged in the complaint and would be required to comply with the TILA and Regulation Z in the future.