Government continues its march toward greater involvement in private enterprise, including the reverse mortgage sector, with the Federal Trade Commission now expanding its scrutiny there. Senior agency attorney Carole Reynolds tells RMD, “We have new powers [granted] in the current federal omnibus appropriations act, which directs us to begin new mortgage rule making.” And, adds Reynolds, that “heightened scrutiny applies to reverse mortgages as well.”
While conceding that recent complaints to the FTC specifically about reverse mortgages have been few – only 50 out of 4 million general complaints to the agency from 2005 through 2008 – she says: “Now that baby boomers are moving into reverse mortgages, we have it very clearly on our radar screen and we expect to continue monitoring [it].”
One area sure to draw the FTC’s examining gaze is the proliferation of advertising and marketing to potential reverse mortgage recipients. “We’re real focused on misrepresentations about government [affiliations],” Reynolds states, citing as examples: “Copycat names, misleading symbols and claims about no payments when there could be taxes and insurance payments; and if the loan comes due there is a payment [required]. You can’t just say ‘no payments’.” The FTC official also takes to task sham offers of “government benefits,” “staying in your home for life” and “guaranteed to qualify.”
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 nmorse@morsecommunications.com
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