By: McIntyre & Lemon, LLC
The Consumer Financial Protection Bureau (CFPB) has taken action against three reverse mortgage companies for deceptive advertisements, including claiming that consumers could not lose their homes.
A reverse mortgage is a special type of home loan that allows homeowners who are 62 or older to access the equity they have built up in their homes and defer payment of the loan until they pass away, sell, or move out. The Mortgage Acts and Practices Advertising Rule prohibits misleading claims in mortgage advertising. In addition, the Dodd-Frank Wall Street Reform and Consumer Protection Act prohibits institutions from engaging in deceptive acts or practices, including with regard to advertising of consumer financial products or services.
Through its investigation, the CFPB found that since 2012, all three companies—two based in California, the other in Texas—misrepresented that consumers could not lose their home and that they would have the right to stay in their home for the rest of their lives. The companies also falsely told potential customers that they would have no monthly payments, retain ownership, and would not be subject to costs associated with refinancing a reverse mortgage.
Under the terms of each of the consent orders, the defendants are required to cease deceptive advertising practices, implement systems to ensure they are complying with all laws, and pay civil penalties.
Read CFPB press release.