The loan is repaid when the borrower sells their house or dies. Reverse mortgages allow borrowers to receive a loan based on equity they have in their home, either in a lump sum or in monthly installments. AAG would also have to stop advertising the allegedly inflated estimated home values to consumers, and would have to refer its customers to certain CFPB materials on reverse mortgages. “We take these types of marketing issues seriously, and are committed to providing our customers with clear and accurate information to help them responsibly access their home equity.”Īs part of a proposed settlement, the lender would pay $1.3 million in civil redress and civil penalties. “AAG is built on its core values of being caring, driven and ethical,” the spokesperson said. “The CFPB will act decisively when we uncover consumer harm or practices that seek to take advantage of vulnerable populations.”Ī spokesperson for AAG said that the third-party home value estimates on the mailers were “not always accurate,” and said that the company cooperated fully with the investigation and had taken steps to address the CFPB’s concerns. “American Advisors Group violated consumers’ trust by advertising reverse mortgages with inflated and deceptive home-value estimates,” said David Uejio, the CFPB’s acting director. The CFPB also alleged that AAG violated a consent order in 2016, which prohibited the lender from violating the consumer financial protection act until December 2021. The CFPB said that while the lender included a footnote in its marketing materials claiming it made “every attempt to ensure the home value information provided is reliable,” those efforts were insufficient.ĪAG performed “no analysis directly related to the estimated home values that it advertised in its mailers,” the watchdog agency claimed. Per the lawsuit, the midpoint of those values were inflated on average by 18%, while at the high end, the values were an average 28% higher. The agency does not explain how it determined the values were inflated, nor does it offer documentation to explain how it calculated the difference between the allegedly inflated values and the accurate values. The direct mailers advertised a prominent “estimated home value,” per the court filing, which the CFPB claimed was inflated. District Court of California’s Central District, the CFPB alleged that Irvine, California-based American Advisors Group (AAG) sent borrowers deceptive and inflated home estimates in direct mailers to convince consumers to take out a reverse mortgage. In a lawsuit filed late last week in the U.S. The Consumer Financial Protection Bureau (CFPB) on Friday settled a lawsuit against the nation’s largest reverse mortgage lender for allegedly sending consumers inflated home valuations.
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