On Monday, New York Attorney General Eric Schneiderman announced his office reached a settlement with New View Mortgage Corp. over the company’s alleged deceptive reverse mortgage direct mailing solicitations.
Reverse mortgages allow a borrower, 62 years or older, to convert the equity on their home into either a lump sum or monthly payments. The funds are not required to be paid back until the borrower moves or dies.
More than 10,000 consumers received reverse mortgage solicitations from New View that were allegedly designed to look like official government notices from the Federal Housing Administration.
According to Schneiderman’s office, the envelopes were labeled with “Economic Stimulus Notice” and “Government Lending Division,” while the body of the solicitation identified the sender as “Federal Housing Administration Home Benefit HECM Program.”
Additionally, the mailing included a section about facts consumers should know about the HECM mortgages. The attorney general’s office concluded that the “facts” presented only the benefits of reverse mortgages and none of the risks associated with the practice.
Among the false “facts” was the statement that “Your Heirs WILL inherit all remaining equity.” The section failed to disclose that heirs have to pay off the mortgage loan in order to keep the home, an issue that has garnered national attention this year.
Under the settlement, the company must pay $12,500 and may not represent the features, benefits, and eligibility requirements of reverse mortgages in future solicitations.
“Making New York more affordable for the middle class includes protecting consumers from false and misleading advertising practices,” Schneiderman says in a news release.
The New York Attorney General’s office provides several tips for consumers considering a reverse mortgage.
A.G. Schneiderman Announces Settlement With Reverse Mortgage Provider Over Misleading Advertising Targeting Seniors [New York Attorney General Eric T. Schneiderman]