On October 8, 2021, the Consumer Financial Protection Bureau (“CFPB”) announced the filing of a complaint and proposed consent order against a reverse mortgage lender in the U.S. District Court for the Central District of California. In the complaint, the CFPB alleged the lender engaged in deceptive advertising practices in violation of the Consumer Financial Protection Act (“CFPA”). Specifically, the CFPB alleges the lender used inflated home values and deceptive statements about the accuracy of the estimates to persuade borrowers into taking out reverse mortgages. Additionally, the CFPB alleges the lender violated the terms of a 2016 consent order the lender previously entered with the CFPB, which barred any violations of the CFPA within five years of the original order.
The proposed consent order would impose $1.1 million in civil penalties, and require a payment of $173,400 in consumer redress. The order also seeks to enjoin the lender from engaging in deceptive practices, including misrepresenting estimated home values, and would require the lender to direct customers and prospective customers to specific CFPB materials about reverse mortgage products.