The Consumer Financial Protection Bureau (CFPB) on Tuesday announced that it has taken action against Mahwah, N.J.-based reverse mortgage lender Nationwide Equities for advertising practices it describes as “deceptive,” accusing the lender’s materials of violating the Mortgage Acts and Practices Advertising Rule (MAP Rule), the Truth in Lending Act (TILA), and the Consumer Financial Protection Act of 2010 (CFPA).

“[CFPB] today took action against Nationwide Equities Corporation for sending deceptive loan advertisements to hundreds of thousands of older borrowers,” the Bureau said in its announcement of the action. “The Bureau found that advertisements from Nationwide Equities misled consumers about how much money they could receive from a reverse mortgage, the fees and costs associated with the products, and the consequences of nonpayment.”

This marks the first major regulatory action of the CFPB against a reverse mortgage industry participant by the Joe Biden administration.

CFPB complaint

In its explanation of the complaint alleging Nationwide’s advertising of violating the MAP Rule, TILA and the CFPA, the Bureau describes those regulations and what they aim to do in pursuit of the Bureau’s mission.

“The MAP Rule prohibits misleading claims in mortgage advertising. The TILA requires accurate disclosures of the terms and costs of consumer loans,” the announcement reads. “In addition, the Dodd-Frank Wall Street Reform and Consumer Protection Act prohibits institutions from violating Federal consumer financial laws, including with regard to advertising of consumer financial products or services under the MAP Rule and TILA.”

In an accompanying consent order issued by the Bureau in conjunction with the announcement, the Bureau describes how it says Nationwide’s advertising operates, and why that led to an enforcement action on its part.

“[Nationwide] advertises [reverse] mortgage products to consumers through direct-mail advertising campaigns targeted at homeowners aged 62 or older and through communications sent to financial professionals who have clients aged 62 or older,” the Bureau said in its consent order. “[Nationwide] has sent these older homeowners and financial professionals hundreds of thousands of advertisements that violate federal law because they are misleading.”

In terms of the content of Nationwide’s advertising, CFPB contends that the company’s materials featured misrepresentations of associated costs with a reverse mortgage; hid the fact that borrowers must continue paying their taxes and insurance or risk losing their home; that letters sent to borrowers made it appear as if the recipient had a preexisting relationship with Nationwide; and that materials indicated that recipients were “pre-approved” for loan amounts when that was not the case.

Enforcement action

In terms of the enforcement action being taken by the CFPB, the Bureau has ordered Nationwide to immediately cease sending deceptive advertisements, and that the lender “must develop and implement a system to ensure all future advertising templates are affirmatively reviewed for compliance with federal consumer financial law,” the announcement reads.

Additionally, Nationwide must pay a civil penalty of $140,000 to the Bureau, which will be deposited in the CFPB’s Civil Penalty Fund according to the Bureau’s announcement.

Acting CFPB Director Dave Uejio said that the measures taken on Tuesday by the CFPB underscore its commitment to its regulatory mission.

“Nationwide Equities misled borrowers into believing they could not lose their homes with a reverse mortgage,” said Acting Director Uejio. “Reverse mortgages are complicated financial obligations that require careful consideration. Today’s action underscores the Bureau’s commitment to helping protect older homeowners from unscrupulous companies.”

Nationwide response

When reached for comment on the CFPB enforcement action, Nationwide Equities provided the following statement to RMD:

“Nationwide Equities is deeply committed to helping seniors and educating them on reverse mortgages and the benefits they offer.  We strive to make sure that every loan benefits our consumer and they have a positive borrowing experience.

“The ads reviewed by the CFPB date as far back as 2016. In that time our marketing policies have evolved and improved, we since have tripled the size of our compliance department to help conform to not only the advertising laws, but also the interpretation of those laws and regulations. Since the Bureau’s last consent orders aimed at the reverse mortgage industry in December of 2016, Nationwide had already updated many of its advertising polices and put in a tiered review system.  We take our responsibilities very seriously and Nationwide will continue to monitor and stay ahead of the ever-changing regulatory landscape.  

“Nationwide Equities is proud of the job we do for our borrowers and we currently have a 4.98 star rating on Zillow.  We take our customer feedback seriously and believe it is essential in providing unparalleled service.”

According to the CFPB consent order issued in conjunction with the announcement, Nationwide has executed a “stipulation and consent to the issuance of the order” as of April 20, which the Bureau says has been accepted.

Nationwide has consented to the issuance of the consent order according to the CFPB, “without admitting or denying any of the findings of fact or conclusions of law, except that Respondent admits the facts necessary to establish the Bureau’s jurisdiction over Respondent and the subject matter of this action.”

Read the CFPB announcement and consent order associated with the action.

Editor’s note: This story was updated on April 28 with a statement from Nationwide Equities.