Tabs

Bank/Thrift Supervision   |    Capital    |    CFPB    |    Deposit Insurance    |    Interchange    |    Mortgage Finance
Municipal Advisors   |    OCC-OTS Merger   |    Preemption    |    QM - QRM    |    Swaps   |    Volcker Rule    |    Full Topics List
 
Qualified Mortgage - Qualified Residential Mortgage
Swaps
Consumer Financial Protection Bureau - CFPB
Bank/Thrift Holding Company Supervision
Capital
Deposit Insurance
Interchange
Mortgage Finance
Municipal Advisors
OCC-OTS Merger
Preemption
Volcker Rule
Corporate Governance
Financial Stability Oversight Council (FSOC)
Appraisals
Office of Financial Research (OFR)
Systemic Risk
Supervision and Oversight
Payment, Clearing and Settlement
Prudential Supervision
Trust & Securities
Asset-Backed Securities
Resolution Authority

Thursday, June 4, 2015

CFPB Finds Reverse Mortgage Ads Misleading

The CFPB released results of a focus group study on reverse mortgage ads, which found that many participants have false impressions about the product. Participants were chiefly confused about the fact that reverse mortgages are loans.

“As older consumers consider reverse mortgage loans to tap into their home equity, they need to be careful of those late night TV ads that seem too good to be true,” said CFPB Director Richard Cordray.

The reverse mortgage market is about 1% of the size of the traditional mortgage market, with 628,000 outstanding loans. Most reverse mortgages today are federally insured through the Federal Housing Authority’s Home Equity Conversion Mortgage program, which carry some regulatory requirements.

The CFPB study is based on 97 unique ads found on TV, radio, in print, and on the Internet, as well as interviews with 60 homeowners age 62 and older in Chicago, Los Angeles and Washington, D.C. The study found that the ads were characterized by:

  • Ambiguity that reverse mortgages are loans
  • False impressions about government affiliation
  • Difficult-to-read fine print
  • Celebrity endorsements that imply reliability and trust
  • False impressions about financial security and staying in the home for the rest of the consumer’s life

The agency also issued an advisory warning to consumers.

Read more.
Read the study.

No comments:

Post a Comment

Please read our comment policy before making a comment.