Reverse Mortgage Companies Issued Major Fine for Deceptive Practices
We have previously discussed the merits and risks of reverse mortgages in a prior post on our blog. While much of the negative reputation that reverse mortgage purveyors carry is outdated, there are still numerous risks involved in taking out a reverse mortgage on the equity you’ve built up in your home. In order to avoid going into a reverse mortgage with an incomplete understanding of how they work, it is critical to speak with an objective and experienced real estate attorney about the advantages and disadvantages of a reverse mortgage. Unfortunately, not all consumers have taken this step of ensuring that they fully understand the process and risks, and many of the seniors who are eligible to take out a reverse mortgage have been victimized by companies making false promises about the products they offer.
Earlier this month, the Consumer Financial Protection Bureau (CFPB) demanded that three different companies offering reverse mortgages withdraw their misleading advertisements. These ads promised that consumers could never lose their homes after obtaining a reverse mortgage—promises that the companies should never have made. The three companies were also fined nearly $800,000 for the misleading advertisements they had already run due to the advertisements’ failure to comply with federal regulations.
The three companies targeted by the CFPB were: American Advisors Group, the country’s largest reverse-mortgage lender; Reverse Mortgage Solutions; and Aegean Financial, which also goes by the name Jubilados Financial when advertising to Spanish-speaking seniors in California. According to CFPB officials, the companies asserted in their advertisements that homeowners could borrow against their home’s equity and “always retain ownership,” and that they “can’t be forced to leave.” CFPB director Richard Cordray stated, “These companies tricked consumers into believing they could not lose their homes with a reverse mortgage. All mortgage brokers and lenders need to abide by federal advertising disclosure requirements in promoting their products.” The advertisements also promised that reverse mortgages could be obtained without incurring any fees, despite the fact that borrowers would incur title insurance fees, appraisal fees, credit report fees, government mortgage insurance fees, and additional closing costs.
If you are considering taking out a substantial loan against the equity in your home, or are planning to make another major real estate transaction in Maryland and wish to be sure your interests are protected, contact the experienced and dedicated Annapolis real estate lawyer Matthew S. Evans III for a consultation at 410-626-6009.