On April 12, 2017, the Massachusetts Attorney General’s Office (AG) announced that it had reached a settlement with a mortgage broker, its employee, and an insurance agent, resolving allegations that they had preyed on elderly consumers by causing them to take out reverse mortgages on their homes. The AG alleged that the broker and agent induced elderly consumers to invest the proceeds from these mortgages into risky annuities that, in some cases, charged severe withdrawal penalties during the first few years. According to the AG, the broker and agent deceived these consumers by failing to disclose or by misrepresenting material information about the financial products and their terms. As a result of the alleged scheme, the broker and agent earned significant commissions.
Under the terms of the settlement, the broker and agent agreed to provide $137,500 in relief to affected consumers. The settlement also prohibits the broker and agent from using funds obtained from reverse mortgages in annuities or other investments.