[Updated] CFPB Takes Motion In opposition to Reverse Mortgage Lender for Promoting Practices
The Consumer Financial Protection Bureau (CFPB) announced Tuesday that it has cracked down on Mahwah, a New Jersey-based Reverse Mortgage Lender Nationwide Equities, for advertising practices it describes as “misleading,” and accused the lender of materials of being against Violating the Mortgage Law and Practice Advertising Rule (MAP Rule), the Truth in Lending Act (TILA), and the Consumer Financial Protection Act of 2010 (CFPA).
“[CFPB] Nationwide Equities Corporation was brought in today for sending misleading loan notices to hundreds of thousands of senior borrowers, “the Bureau said in its announcement of the measure. “The Bureau found that Nationwide Equities advertisements misled consumers about how much money they could get from a reverse mortgage, the fees and costs associated with the products, and the consequences of failing to pay.”
This is the first major regulatory action taken by the CFPB against a participant in the reverse mortgage industry by the Joe Biden Administration.
In its statement on the complaint that Nationwide advertised TILA, and the CFPA for violating the MAP Rule, the Bureau described these rules and their objectives in pursuing the Bureau’s mission.
“The MAP rule prohibits misleading claims in mortgage advertising. TILA requires detailed disclosure of the terms and costs of consumer credit, ”the announcement said. “In addition, the Dodd-Frank Reform and Consumer Protection Act on Wall Street prohibits institutions from violating federal consumer finance laws, including in relation to the promotion of financial products or services to consumers under the MAP Rule and TILA . “
In an accompanying letter of consent from the Bureau in connection with the announcement, the Bureau describes how Nationwide’s advertising works and why it resulted in an enforcement action.
“[Nationwide] advertises [reverse] Mortgage products to consumers through direct marketing campaigns for homeowners from 62 years of age and through communications to financial professionals with customers from 62 years of age, ”said the Bureau in its declaration of consent. “[Nationwide] has sent these senior homeowners and finance professionals hundreds of thousands of advertisements in violation of federal law for being misleading. “
In relation to the content of Nationwide’s advertisements, CFPB alleges that the company’s materials contained misrepresentations of the costs associated with a reverse mortgage. hid the fact that borrowers would continue to pay their taxes and insurance or run the risk of losing their home; letters to borrowers made it appear that the recipient had a pre-existing relationship with Nationwide; and that materials indicated that loan recipients were “pre-approved” when they were not.
In relation to the enforcement actions taken by the CFPB, the Bureau has instructed Nationwide to cease sending misleading advertisements immediately and that the lender “must develop and implement a system to ensure that all future advertisement submissions are positively screened for compliance with federal consumer finance regulations Law, ”says the announcement.
In addition, Nationwide is required to pay a civil penalty of US $ 140,000 to the Bureau, which the Bureau announced will be deposited in the CFPB’s Civil Penalty Fund.
Acting CFPB Director Dave Uejio said the actions taken Tuesday by the CFPB underscore its commitment to its regulatory mission.
“Nationwide Equities has misled borrowers into believing they could not lose their homes on a reverse mortgage,” said Acting Director Uejio. “Reverse mortgages are complex financial obligations that require careful consideration. Today’s action underscores the Bureau’s commitment to protecting older homeowners from unscrupulous businesses. “
When asked for comment on the CFPB’s enforcement action, Nationwide Equities sent RMD the following statement:
“Nationwide Equities is committed to helping seniors educate them about reverse mortgages and the benefits they offer. We strive to ensure that all credit benefits our consumers and that they have positive borrowing.
“The advertisements reviewed by the CFPB are from 2016. During this time, our marketing guidelines have evolved and improved. Since then, we have tripled the size of our compliance department in order to comply with not only advertising laws but also the interpretation of those laws and regulations. Nationwide had updated many of its advertising policies and implemented a tiered review system since the last Reverse Mortgage Industry Bureau approval requests in December 2016. We take our responsibilities very seriously and Nationwide will continue to monitor and stay one step ahead of the ever-changing regulatory landscape.
“Nationwide Equities takes pride in the work we do for our borrowers, and we currently have a 4.98 star rating for Zillow. We take our customer feedback seriously and believe it is essential to provide unparalleled service. “
Pursuant to the CFPB Consent Ordinance issued in connection with the announcement, Nationwide has issued a “Determination and Consent to Issue the Order” effective April 20, which the Bureau said was approved.
Nationwide has consented to the CFPB giving consent “without admitting or denying any finding of fact or conclusions, except that the Respondent admits the facts necessary to establish the Bureau’s jurisdiction over the Respondent and the subject matter of them Action.”
Read the CFPB announcement and consent order associated with the action.
Editor’s note: This story was updated on April 28 with a statement from Nationwide Equities.