WASHINGTON (Legal Newsline) – The Consumer Financial Protection Bureau (CFPB) announced Dec. 7 that it has ordered American Advisors Group, Reverse Mortgage Solutions and Aegean Financial to stop alleged deceptive advertising practices, implement systems to ensure they are complying with all laws, and pay penalties.
The three companies are reverse mortgage companies. A reverse mortgage is a special type of loan that allows homeowners who are 62 or older to use home equity to defer loan payment until they pass away, sell or move out. Consumers usually receive proceeds from the loan as either a lump-sum payment, monthly payment or as a line of credit.
“These companies tricked consumers into believing they could not lose their homes with a reverse mortgage,” CFPB Director Richard Cordray said. “All mortgage brokers and lenders need to abide by federal advertising disclosure requirements in promoting their products.”
The Mortgage Acts and Practices Advertising Rule bans companies from using misleading claims in mortgage advertising. The Dodd-Frank Wall Street Reform and Consumer Protection Act bars institutions from engaging in deceptive acts or practices.
American Advisors Group will pay a $400,000 penalty, Reverse Mortgage Solutions a $325,000 penalty, and Aegean Financial a $65,000 penalty.