The CFPB charged a mortgage lender with using exaggerated and misleading home estimates to encourage customers to take out reverse mortgages.
In a Complaint filed in the U.S. 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 "every attempt to ensure" that its home value estimates were accurate. The CFPB claimed that the midpoint and high-end estimates the company provided were between 18 and 28 percent inflated on average, with the company having conducted no analysis in connection with the advertised estimates. The CFPB stated that the misrepresentations were material because they could cause reasonable customers to think that they could make greater gains from the reverse mortgages than were actually possible. The CFPB also alleged that the company's deceptive conduct violated a December 2016 consent order that banned it from engaging in deceptive advertising.
The CFPB charged the company with violations of Sections 1031 ("Prohibiting unfair, deceptive, or abusive acts or practices") and 1036 ("Prohibited acts") under Dodd-Frank. In its Proposed Stipulated Final Judgment and Order, the CFPB is seeking a consent order requiring the company to (i) pay $173,400 in consumer redress, (ii) pay a $1.1 million civil money penalty, and (iii) cease misrepresenting estimated home values to consumers.
Primary Sources
- CFPB Press Release: CFPB Takes Action Against American Advisors Group for Deceptively Marketing Reverse Mortgages to Consumers
- CFPB Complaint: American Advisors Group
- CFPB Proposed Stipulated Final Judgment and Order: American Advisors Group
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