WASHINGTON—The Consumer Financial Protection Bureau has taken action against Nationwide Equities Corp. for allegedly sending deceptive loan advertisements to hundreds of thousands of older borrowers, the agency reported.
The Bureau said it found advertisements from Nationwide Equities misled consumers about how much money they could receive from a reverse mortgage, the fees and costs associated with the products, and the consequences of nonpayment. The advertisements violated the Mortgage Acts and Practices Advertising Rule (MAP Rule), the Truth in Lending Act (TILA), and the Consumer Financial Protection Act of 2010 (CFPA), the CFPB stated.
The CFPB said it is ordering the company to pay a penalty, cease its illegal conduct, and implement a compliance plan to affirmatively review every advertisement to ensure they do not violate federal law.
“Nationwide Equities misled borrowers into believing they could not lose their homes with a reverse mortgage,” said CFPB Acting Director Dave Uejio. “Reverse mortgages are complicated financial obligations that require careful consideration. Today’s action underscores the Bureau’s commitment to helping protect older homeowners from unscrupulous companies.”
About the Company
Nationwide Equities is a mortgage broker and direct lender that offers and originates reverse mortgage loans, primarily home equity conversion mortgage loans and private jumbo reverse mortgage loans. The company, headquartered in Mahwah, N.J., is one of the largest reverse mortgage lenders in the United States, is licensed in 17 states and the District of Columbia, and operates three retail branches across the country.
The CFPB noted the MAP Rule prohibits misleading claims in mortgage advertising. The TILA requires accurate disclosures of the terms and costs of consumer loans. In addition, the Dodd-Frank Wall Street Reform and Consumer Protection Act prohibits institutions from violating Federal consumer financial laws, including with regard to advertising of consumer financial products or services under the MAP Rule and TILA, the CFPB explained.
Other Findings
The Bureau said it found Nationwide Equities sent potential customers advertisements that were deceptive and illegal. The advertisements and letters included:
- Hidden costs: “The advertisements misrepresented the costs of the reverse mortgages Nationwide Equities offered, including the fees it charged for the loans, as well as the associated taxes and insurance,” the CFPB said.
- Hidden risks: “Nationwide Equities hid the fact that borrowers must continue to pay taxes and insurance or risk losing their home.”
- False existing relationship: “Letters sent by Nationwide Equities made it appear that the consumer already had an existing relationship with the lender,” according to the CFPB.
- False Pre-approvals: “Nationwide Equities told consumers they were pre-approved for specific loan amounts when they were not and misrepresented the potential savings from refinancing consumers’ existing reverse mortgage,” the CFPB stated.
Violations All Over the MAP
The CFPB said it found Nationwide Equities had multiple MAP Rule violations by misrepresenting the:
- Fees, costs, or payments
- Taxes and insurance
- Potential for default and right to reside in the dwelling
- Association of the product or provider, or source of the communications
- Available cash or credit
- Likelihood to obtain a particular term or refinancing
The advertisements violated the MAP Rule, the TILA and the CFPA, the Bureau said.
The consent order requires Nationwide Equities to:
- Stop sending deceptive advertisements: Nationwide Equities must immediately cease all illegal advertising practices.
- Implement a compliance plan: The company must develop and implement a system to ensure all future advertising templates are affirmatively reviewed for compliance with federal consumer financial law.
- Pay a civil penalty: The order also imposes a penalty of $140,000 to be paid to the Bureau and deposited in the CFPB’s Civil Penalty Fund.
Read the CFPB’s consent order.