Ad promises refinancing, trip to Hawaii

February 12, 2008 12:00:00 AM PST
It's a new twist on the mortgage crisis.

Mortgage brokers were doing lots of things to get your business during the housing boom. In this case, a broker used more than just attractive mortgage rates. He offered tempting vacations. But like the housing boom, it went bust.

Ted Davidson of Sonoma County saw the mortgage crisis heading his way last summer. So Ted went shopping for a fixed rate loan to replace his adjustable rate mortgage. That's when he saw an ad in the local newspaper from The Mortgage Network of Santa Rosa, offering good rates on a refinance and along with it, a free seven-day Hawaiian trip for two.

"Getting out of my adjustable rate mortgage was number one, but the trip was just a cherry on top," says Ted.

The Davidsons were happy with their loan, but weeks went by and still no Hawaiian trip. Ted called Mortgage Network owner, Pete Kerston, who said he didn't recall offering a free Hawaiian trip with airfare. So Ted faxed him a copy of the ad and said he would call it even for $750.

"He finally called me and said, 'Absolutely not. I'll give you $500 bucks and I'm doing you a favor doing that," recalls Ted.

"They negotiated a contract that appears to have included, not only a number of other terms, but one term that says you get a trip to Hawaii," says ABC7 legal analyst, Dean Johnson.

Johnson says if negotiations included the promise of a free seven-day Hawaiian trip, it's enough to make it part of the contract.

"If I'm the judge in this case, the Davidsons get either their trip to Hawaii or they get the fair market value," says Johnson.

7 On Your Side contacted Kerston. He said his $500 offer for the Hawaiian trip stands. The trips to Hawaii only cost him $160 because he buys them in bulk. Ted wanted $750, and Pete told us, "I told him to go jump in the lake."

It seemed like a good time to pay Pete a visit.

Finney: "Hi, I'm looking for Pete Kerston. Is he here?"

Woman: "No, he's not."

Finney: "He's not here?"

Woman: "No."

Finney: "I'm Michael Finney from Channel 7. Oh, she's gone. Okay. Tell Pete that I was here--"

Man: "Okay."

Finney: "I'm really anxious for him to call me."

Man: "Okay."

Finney: "And tell him that if he can get actually get that deal, I'll pay for him and me both -- we'll go to Hawaii."

Man: "And him, too. (points to camera person)"

Finney: "And him, too and you, too. We'll take all four us. We'll have a great time."

Man: "Sounds good Mike."

Finney: "Okay, thank you."

As we're leaving, we find Pete in the parking lot.

Finney: "Pete, I'm Michael Finney from Channel 7 News. I want to talk to you about Ted and his trip to Hawaii. Why don't you book the trip for him then?"

Pete: "He doesn't want the trip. He wants $750 and I told him I wouldn't do that."

Ted told us he "wants what's a trip for two to Hawaii."

Finney: "Can you really get a trip for Hawaii for two people with airfare, hotel for $500?"

Pete: "That's correct."

Ted told us the minimum he could find was $1,400.

Finney: "Where would he get it for $500? I've been a consumer reporter a long time. I've never seen that."

Pete: "Check, uh, check it out."

So we did. The lowest prices we could find were these: $1,134 from Pleasant Holidays, $1,420 through Travelocity, $1,554 through Expedia and $1,600 from Sun Trips.

Pete called our office later and left a voicemail message saying, "I only paid $160 for these cruises... I offered him $500 bucks. You can get it for $496 any day of the week... and Davidson won't take a dime off of $750. So he can demand it all he wants and I won't give it to him. And that's the situation and I'm proud of it."

Pete kept calling the Hawaiin trip a cruise, apparently because he has offered cruises in some of his ads, as well.

This isn't the first time one of Pete's ads has caused problems. The Department of Real Estate said past newspaper ads were "false, misleading or deceptive" when it came to advertised interest rates.

Pete told us he's resolved that matter and those ads are no longer running.

Since our visit to Pete, 7 On Your Side asked him several more times to sit down and discuss that state order and the Hawaii trip. He did not agree to an interview, but our offer stands.


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