CFPB Reaches Second Settlement With Reverse Mortgage Provider | Ballard Spahr srl
Last week, the CFPB simultaneously filed a lawsuit against American Advisors Group (AAG) in a California federal district court and a proposed final judgment and order to settle the lawsuit. The lawsuit alleged that AAG inflated home appraised values when marketing its reverse mortgage product and made false claims about AAG’s efforts to ensure the reliability of home valuation information.
In 2016, the Bureau made a consent order with AAG to resolve allegations that AAG misleading advertising in violation of the Mortgage Laws and Practices Act (Regulation N) and the Consumer Financial Protection Act. In addition to requiring AAG to pay a civil fine of $ 400,000, the consent order contained a provision prohibiting AAG from violating the CFPA for five years, or until December 2021.
In his new complaint, the CFPB asserted that AAG’s alleged use of inflated home values and misrepresentation about its efforts to ensure home equity information is reliable constituted deceptive acts or practices in violation of the CFPA. He also alleged that by engaging in such deceptive acts or practices, AAG violated the consent order. The CFPB claimed that by violating the consent order, AAG violated the federal consumer finance law because the consent order, as an order prescribed by the Bureau, constitutes a federal finance law. of consumers.
The proposed final stipulated judgment and order forces AAG to pay a civil fine of $ 1.1 million and compensation of $ 173,400 to consumers who have received mail from AAG with appraised home values, paid and received appraisals with lower property values at AAG’s estimates, and decided not to proceed with obtaining a reverse mortgage from AAG. It also prohibits AAG from engaging in deceptive practices in general and, in the course of marketing its consumer financial products, prohibits AAG from misrepresenting any material material to consumers, including, but not limited to , house values. Additionally, AAG must submit a compliance plan to CFPB and include links to specific CFPB reverse mortgage materials in its direct mail solicitations and welcome communications to borrowers with newly created reverse mortgages.