In addition, disclosures must make it clear that the lender will have a security interest in the borrower's property. Complete and accurate information disclosure facilitates the market which is, after all, merely a large collection of transactions by numerous individuals and entities. Providing complete information allows individual consumers to evaluate realistically the risks and benefits of their individual transactions. Encouraging informed decision making has been and should continue to be the guiding principle of FTC enforcement in the lending and financing industry. The disclosures stress that the loan does not have to be closed just because the borrower signed the application, and the borrower could lose his or her home if he or she fails to meet the loan's obligations.
Disclosures give consumers the tools to make an informed choice.
It is up to the consumer, however, to use those tools to make a wise decision. The growth of the subprime mortgage industry has enabled many consumers to obtain loans, who previously had very limited access to credit. It is also important, however, that the consumers' increased access to capital not be burdened by deceptive or other unlawful lending practices. The Commission has taken a variety of actions to address reported abuses in the subprime credit market. In one of our earliest subprime lending cases, the Commission filed a complaint against Capital City Mortgage Company, a Washington, DC-area mortgage lender, asserting that the defendants engaged in law violations that resulted in serious injury to borrowers, including the loss of their homes.