False advertising, while not new, is cropping up often enough in direct mail pieces to prospective reverse mortgage customers that public and private authorities are expressing concern.
Often appearing as if it is coming from an official (i.e. government) source, the appeals offer to help unsuspecting recipients – usually seniors – take the necessary and proper steps to obtain this specialty financial product. “It is a source of concern,” says Peter Bell, president of the National Reverse Mortgage Lenders Association, who notes that the mailings “are not coming from lenders, but lead generation companies that don’t understand the product.”
He adds that the most common mailings “are impersonations of government agencies [which are] not stating that HECM/reverse mortgages are a loan program. There was a wave of them a year ago, when the new loan limit was announced.” Earlier this year, ABC 7 San Francisco ran a feature on lenders using these types of mailings.
Industry journalist Jerry Demuth has discovered that HUD lumps all mortgage-related complaints together, “so there is no category specifically for reverse mortgages,” he reports exclusively for RMD.
“The FTC may not even have a category this ‘narrow’,” Demuth points out, noting that according to an FTC media person, the agency “can’t reveal anything [re: complaints], even just numbers, let alone anything on types of complaints, because [it says] all information is ‘nonpublic’.” What’s more, he discovered that since October 1, 2007, HUD has sent notices regarding misleading ads to nine lenders, telling them to stop and to change or eliminate the misleading portions of their ads. The occasional repeat offender reportedly has received civil money penalties, Demuth reports.
Neil J. Morse has been a communications professional working in the mortgage finance industry for more than a decade, currently specializing in the reverse mortgage sector. He can be reached at [email protected]
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