CFPB sues reverse mortgage lender for deceptive practices


United States: CFPB sues reverse mortgage lender for deceptive practices

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CFPB accused a mortgage lender to use inflated and misleading home estimates to encourage customers to take out reverse mortgages.

In a complaint filed with the United States District Court for the Central District of California, the CFPB alleged that the company falsely claimed in its reverse mortgage marketing materials to have made “all attempts to insure “that his home valuation estimates were correct. The CFPB claimed that the median and upper estimates provided by the company were inflated on average between 18 and 28%, as the company did not perform any analysis in relation to the announced estimates. The CFPB said the misrepresentation was important because it could trick reasonable customers into believing that they could earn larger payouts from reverse mortgages than was actually possible. The CFPB also alleged that the deceptive conduct of the company violated a december 2016 consent order prohibiting her from engaging in misleading advertising.

CFPB accused the company of article violations 1031 (“Prohibit unfair, deceptive or abusive acts or practices”) and 1036 (“Prohibited Acts”) under Dodd-Frank. In his Proposed Stated Final Judgment and Order, CFPB seeks a consent order requiring the company to (i) pay $ 173,400 in consumer redress, (ii) pay a civil fine of $ 1.1 million, and (iii) stop distorting the estimated value from homes to consumers.

Primary sources

  1. CFPB Press Release: CFPB Takes Action Against American Advisors Group for Deceptive Marketing of Reverse Mortgages to Consumers
  2. CFPB complaint: American Advisors Group
  3. Final judgment and order proposed by the CFPB: American Advisors Group

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