American Advisors Group, Reverse Mortgage Solutions and Aegean Financial are the latest names to face the wrath of the Consumer Financial Protection Bureau due to deceptive advertisements in reverse mortgage lending.
Collectively, the bureau ordered the three reverse mortgage lenders to pay a civil penalty of $790,000.
A reverse mortgage is a different 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.
Laws prohibit misleading claims in mortgage advertising and institutions from engaging in deceptive acts or practices.
“These companies tricked consumers into believing they could not lose their homes with a reverse mortgage,” said CFPB Director Richard Cordray. “All mortgage brokers and lenders need to abide by federal advertising disclosure requirements in promoting their products.”
Here’s overview of each the action on each mortgage lender. For a full description, check out the bureau’s website.
American Advisors Group
Through its investigation, the CFPB found that since January 2012 American Advisors Group’s advertisements 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 company also falsely told potential customers that they would have no monthly payments and that with a reverse mortgage they would be able to pay off all debts.
Under the terms of today’s consent order, the company must make clear and prominent disclosures in its reverse mortgage advertisements and implement a system to ensure it is following all laws. It will also pay a civil penalty of $400,000.
"American Advisors Group (AAG) is deeply committed to helping older Americans achieve stability in retirement. We are dedicated to raising awareness about reverse mortgage loans and educating consumers so they can determine if this is the right solution for their financial situation. We take our regulatory responsibilities seriously and have made a significant investment in our compliance and legal infrastructure to ensure we fully conform to all marketing laws and rules—and better understand how they are interpreted. As we’ve grown, so have AAG’s ever-evolving marketing and advertising practices," American Advisor Group said in a statement.
Reverse Mortgage Solutions
Through its investigation, the CFPB found that since January 2012 Reverse Mortgage Solutions’ advertisements 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 company also falsely told potential customers that they would have no payments with a reverse mortgage and that they would “always retain ownership” and “can’t be forced to leave.
Under the terms of today’s consent order, the company must make clear and prominent disclosures in its reverse mortgage advertisements and implement a system to ensure it is following all laws. It will also pay a civil penalty of $325,000.
Aegean Financial
Through its investigation, the CFPB found that since 2012, Aegean Financial's advertisements 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 reverse mortgage broker also falsely told potential customers that they would have no payments with a reverse mortgage and claimed that consumers would not be subject to costs associated with refinancing a reverse mortgage.
Under the terms of today’s consent order, the company cannot imply affiliation with the government, must make clear and prominent disclosures in its reverse mortgage advertisements, implement a system to ensure it is following all laws, and maintain complete and accurate records. It will also pay a civil penalty of $65,000
