Question

WASHINGTON, D.C.– Today the Consumer Financial Protection Bureau (CFPB) took action against three reverse mortgage companies for deceptive advertisements, including claiming that consumers could not lose their homes. The CFPB is ordering American Advisors Group, Reverse Mortgage Solutions, and Aegean Financial to cease deceptive advertising practices, implement systems to ensure they are complying with all laws, and pay penalties.

“These companies tricked consumers into believing they could not lose their homes with a reverse mortgage,” said CFPB Director Richard Cordray. “All mortgage brokers and lenders need to abide by federal advertising disclosure requirements in promoting their products.”

A reverse mortgage is a special type of home loan that allows homeowners who are 62 or older to access the equity they have built up in their homes and defer payment of the loan until they pass away, sell, or move out. The loan proceeds are generally provided to the borrowers as lump-sum payments, monthly payments, or as lines of credit. Homeowners remain responsible for payment of taxes, insurance and home maintenance, among other obligations.

The Mortgage Acts and Practices Advertising Rule prohibits misleading claims in mortgage advertising. In addition, the Dodd-Frank Wall Street Reform and Consumer Protection Act prohibits institutions from engaging in deceptive acts or practices, including with regard to advertising of consumer financial products or services.

RMK Financial Corporation

RMK Financial Corporation is a California-based mortgage lender which also does business under the name Majestic Home Loans. RMK mailed print advertisements to more than 100,000 consumers in several states, using the names and logos of the Department of Veterans Affairs (VA) and the Federal Housing Administration (FHA) in a way that falsely implied that the advertisements were sent by the VA or FHA, or that the company or the advertised mortgage products were endorsed or sponsored by the VA or FHA. RMK sent its advertisements to tens of thousands of U.S. military servicemembers and veterans, and other holders of VA-guaranteed mortgages.

The company’s typical advertisement for VA mortgages featured the Department of Veterans Affairs seal and logo at the top of the page and described its loan products as part of a “distinctive program offered by the U.S. government.” The ad instructed consumers to call the “VA Interest Rate Reduction Department” at a phone number that in fact belonged to RMK. Some mailers were labeled “FHA Benefits” and included an image of the Statue of Liberty on the outside, along with warnings citing the U.S. Code and threatening fines and imprisonment for tampering with the letter.

RMK’s ads also contained misrepresentations about the loans’ interest rates and estimated monthly payments, including whether the interest rate was fixed or variable. Consumers who called the company were sometimes given misleading information over the phone; in some cases RMK employees told callers or implied that RMK was endorsed by the VA or FHA.

The CFPB’s investigation found that RMK’s practices violated the Truth in Lending Act, the Mortgage Acts and Practices Advertising Rule, and other federal consumer laws. The 2011 Mortgage Acts and Practices Advertising Rule prohibits misleading claims in mortgage advertising, including implying a government affiliation.

Under the terms of today’s consent order, RMK will be prohibited from falsely implying a government affiliation in future advertisements. It will also pay a civil penalty of $250,000.

What are two things of the above companies did that was deemed deceptive?

Answer 1

Any reversed debt (besides described as house property exchange debt) is a unique and original variety of loan, by which homeowners ought an life of 62 ages of more extra can evaluate the property of their houses and admit the amount of the reversed debt loan till they roll out, sell, or transfer away. The loan is normally given when the landlord/borrower walks out, or if he/she dies. Hence the loan is for switching the united house property in the sort of fluid assets. The interests of the loan are to be settled as monthly installments, lump-sum prices, or in the kind of credit marks. Though, elders who get the loan and do not fulfill up on tax installments, insurance, and routine home keeping will venture to default on the loan and will be made to move out.

The organizations in question here are fooling the customers in considering that they will nevermore miss their houses when they prefer a reversed debt, which is not genuine. The Governmental promoting confession guidelines and specifications should be abided by collection the debt moneylenders and agents when they advertise their merchandises, including a reversed debt loan. Governmental laws claim that the moneylenders notify the borrowers of all the various and accessible characteristics of the reversed debt loan plus also describe each of those characteristics, requirements, and qualifications in common speech. A federal regulatory agency, the Consumer Financial Protection Bureau (CFPB) noticed that the organizations are presenting fake applications in their bountiful television, picture, broadcasting ads, and in the direct selling report kits that homeowners/borrowers will nevermore be made to go and will ever maintain control of their house. But, the truth of the thing is that loan default may be increased while the borrower is missing from the house for longer than 6 months, befalls after the amount of homeowner coverage and estate taxes, and/or does not meet the additional conditions of the loan. The banker will deprive on the house in state the borrower neglects.
Moreover, the CFPB points out that those ads did also pretending that there will be no price to reverse debt, which is the secondary deception in the case hither functioned by the lending corporations. The truth is that the borrowers ought to repay the credit record charge, estimate costs, title coverage cost, payment for the government debt coverage, as well as the closing charges, amongst another payments. Consequently, certain publications have been affirmed to protect valuable details and data or present it in an incorrect form, through scamming people.
Aside of certain 2 deceptions, there are more additional deceptive techniques compared with reverse debt loan ads. For example, any of the publications for the loan suggest that the loan will not be concerning the Medicare or human security advantages of the borrower. Yet whatever certain publications do not suggest is that the reverse debt loan will influence ability for Medicaid. Some corporations more mislead that the successors will regularly acquire the house also are not revealing all the requirements for estate. The truth is that beneficiaries can only retain the control of a home in the death of the customer if they pay 95% of the total and assessed worth of the house, or return the reverse debt. In most utmost circumstances, it has been noticed that beneficiaries do not really receive the house. Furthermore, the ads are more delivering the impact that the loans are anyhow affiliated to the government and the loan equality is a sort of advantage that the elders will be afforded over public funds, which is uniquely fallacious.