The Consumer Financial Protection Bureau says these lenders were falsely suggesting a government affiliation in pursuit of reverse mortgage customers.
The Consumer Financial Protection Bureau is cracking down on three mortgage lenders for deceptive advertising.
According to a press release, the CFPB has filed suit against All Financial Services for false reverse mortgage advertising. The CFPB has also ordered American Preferred Lending and Flagship Financial Group to stop their misleading ads.
All three companies have allegedly implied that they have U.S. government approval of their products. CFPB Director Richard Cordray said in a statement:
Each of these companies has misled consumers with false advertising. The U.S. government is very serious about stopping companies from falsely claiming federal authority, and we are particularly concerned about false or deceptive statements made in advertisements about reverse mortgages that target older Americans.
The CFPB said advertisements sent out by the companies imitated U.S. government notices.
“While government programs insure or guarantee certain mortgages, the private lenders that make these loans are not government entities and are not affiliated with the U.S. government,” the CFPB said.
All Financial Services, which is based in Maryland, also allegedly produced deceptive ads about its reverse mortgages.
In addition to sending out mailers that looked like government notices, Utah-headquartered Flagship Financial Group claimed that it was “HUD-Approved” in mailings, the CFPB said. Flagship has been ordered to stop misleading consumers by pretending to have a government affiliation. It also has to pay a civil penalty of $225,000.
California-based American Preferred Lending sent out notices that made it appear to have a government affiliation. “Although the company is authorized to originate VA and FHA loans, it is not an agent of, or affiliated with, the U.S. government,” the CFPB said. American Preferred Lending has to pay an $85,000 civil penalty.
Getting a mortgage is a big deal for most of us, and mistakes associated with them tend to be a big deal, too. For more on reverse mortgages, check out Ask Stacy: How Do Reverse Mortgages Work?
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