On December 7, 2016, the Consumer Financial Protection Bureau (CFPB) entered into consent orders with three separate reverse mortgage companies for deceptive advertising practices.

The Mortgage Acts and Practices Advertising Rule prohibits misleading claims in mortgage advertising. The Dodd-Frank Wall Street Reform and Consumer Protection Act also prohibits institutions from engaging in deceptive acts or practice, including in connection with advertising financial products or services.

American Advisors Group

The CFPB found that since January 2012 American Advisors Group’s advertisements related to reverse mortgage products 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.

Pursuant to the Consent Order entered into with the CFPB, American Advisors Group must make clear and prominent disclosures in connection with its future reverse mortgage advertisements, implement a system to ensure compliance with the law, and pay a $400,000 penalty.

Reverse Mortgage Solutions

The CFPB found that since January 2012 Reverse Mortgage Solutions’ advertisements related to reverse mortgage products 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. In addition, the company falsely stated to consumers that they would have no payments with a reverse mortgage and that they would always retain ownership of their home and could not be forced to leave. Further, the company misrepresented that consumers’ heirs would inherit the home, without disclosing any conditions to inheritance. The CFPB also found that the company misrepresented that a reverse mortgage could eliminate debt, when in fact the reverse mortgage was a debt.

Pursuant to the Consent Order entered into with the CFPB, Reverse Mortgage Solutions must make clear and prominent disclosures in connection with its future reverse mortgage advertisements, implement a system to ensure compliance with the law, and pay a $325,000 penalty.

Aegean Financial

The CFPB found that since 2012, Agean Financial’s advertisements in connection with reverse mortgage products 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. In addition, the company also falsely stated to consumers that they would not be subject to costs associated with refinancing a reverse mortgage. Finally, the CFPB found that the company misrepresented to consumers that it was affiliated with the government.

Pursuant to the Consent Order entered into with the CFPB, Agean Financial cannot imply an affiliation with the government, must make clear and prominent disclosures in its future reverse mortgage advertisements, implement a system to ensure compliance with the law, and pay a $65,000 penalty.

Bottom Line: For companies in the reverse mortgage industry, these enforcement actions should serve as a warning to conduct a review of their advertising and marketing practices to ensure compliance with the law.