Reverse Mortgage DetailsDetails of the reverse mortgage
CFPB cracks down on three reverse mortgage banks for misleading advertising
The Consumer Financials Protection Bureau (CFPB) issued letters of approval for false promotional activities with three independent reverse mortgage lenders on December 7, 2016. Under the Mortgage Act and the Practices Advertizing Rules, mortgage advertisers are prohibited from making false claim. Dodd-Frank Wall Street Reform and Consumer Protection Act also forbids banks from performing fraudulent actions or practicing fraudulent intent, even in the context of promoting finance goods or providing them.
CFPB found that American Advisors Group advertising since January 2012 in relation to reverse mortgage product misconstrued that the consumer could not loose their home and that they had the right to remain in their home for the remainder of their life. According to the Consent Ordinance concluded with the CFPB, American Advisors Group must make clear and conspicuous disclosure in relation to its prospective reverse mortgage notices, must put in place a system to assure legal conformity and must incur a fine of $400,000.
CFPB found that Reverse Mortgage Solutions' advertising since January 2012 in connection with reverse mortgage product was misrepresenting that people could not loose their homes and that they had the right to remain in their homes for the remainder of their life. Furthermore, the firm erroneously told the consumer that they would not receive any payment with a reverse mortgage and that they would always keep the property in their home and could not be compelled to go.
In addition, the firm has erroneously claimed that consumers' inheritors would come into the house without revealing any terms of heritance. CFPB also found that the firm wrongly argued that a reverse mortgage could cancel the debts, even though the reverse mortgage was actually a fault. According to the Consent Ordinance concluded with the CFPB, Reverse Mortgage Solutions must make clear and conspicuous disclosure in relation to its prospective reverse mortgage notifications, must put in place a system to secure legal conformity and must incur a fine of USD 325,000.
CFPB found that Agean Financial's advertising of reverse mortgage product since 2012 wrongly portrayed that the consumer could not loose their home and that they had the right to remain in their home for the remainder of their life. Moreover, the firm erroneously explained to the consumer that they would not be liable for any cost related to the funding of a reverse mortgage.
Lastly, CFPB found that the firm wrongly presented to the consumer that it was related to the State. According to the CFPB Consent Statement, Agean Financial cannot be deemed to be part of the Federal Administration, must make clear and conspicuous disclosure in its prospective reverse mortgage notices, must establish a system to enforce legal process and must be fined $65,000.
To reverse mortgage businesses, these enforcements should be used as a reminder to carry out a check on their promotional and market practice to make sure they comply with the Act.