On December 7, 2016, the Consumer Financial Protection Bureau (CFPB) announced that it had entered into consent orders with three different reverse mortgage companies concerning alleged violations of the Consumer Financial Protection Act (CFPA) and Regulation N’s prohibitions on making material misrepresentations as to any “mortgage credit product.”
The first consent order alleged that the mortgage company told consumers that they could not lose their homes under a reverse mortgage, and that they would not have to make any monthly payments on their reverse mortgage loan plan. To settle these allegations, the company agreed to pay a civil penalty of $400,000, and to make clear, prominent, and accurate disclosures to consumers.
The second consent order alleged that the mortgage company also told consumers that they could not lose their homes, that their heirs would still inherit the property regardless of payments being made, and that the loan could eliminate all the consumer’s debt. The CFPB also alleged that the company misrepresented the amount of time consumers had to decide whether to enter into the reverse mortgage loan plans. The company agreed to pay a civil penalty of $325,000 and to make clear, prominent, and accurate disclosures.
The third consent order involved a California-based mortgage company that allegedly violated told consumers that they would be able to stay in their homes their entire lives, that there are no costs associated with a reverse mortgage, and that the company was affiliated with the United States government (which it is not). The company agreed to pay a civil penalty of $65,000, to make clear, prominent, and accurate disclosures, and to no longer represent that it is affiliated with the United States government.