Two mortgage brokers have been sued for allegedly using unfair and deceptive marketing practices in soliciting reverse mortgages to seniors. Illinois Attorney General Lisa Madigan filed the suits against 1) Hartland Mortgage Centers Inc., based in Woodridge, Illinois, and 2) American Advisors Group Inc. (and company president Reza Jahangiri), based in Irvine, California.
According to Madigan, the companies use extremely misleading language in their advertising, sometimes even disguising their loans as government benefits that borrowers don’t have to repay. Under the FDCPA, it is illegal for mortgage brokers to make false statements or mislead consumers in any way, such as misrepresenting what borrowers are signing up for and what they will owe.
Both lawsuits claim that the defendants targeted seniors to take out Home Equity Conversion Mortgages, also known as reverse mortgages, which allow elderly homeowners (age 62+) to borrow money against the equity in their home.
Consumers reported that they were unaware that what the companies were offering were reverse mortgages, or even a loan of any kind. Allegedly, the companies falsely implied to seniors that they could be eligible for lifetime monthly income or lump-sum payments as part of government benefit programs offered to all seniors. In fact, the offer was actually for loans that would eventually need to be paid back.
With a reverse mortgage, older homeowners can sometimes continue to live in their homes. Borrowers receive money based on their home’s value, the amount of equity in the home, and their age. Proceeds are payable in a lump sum, in monthly installments, or as a line or credit to draw upon. Reverse mortgages come with strict terms and conditions which require borrowers to repay the loan upon certain conditions being met, including when the last surviving borrower dies, sells or moves out of their homes or when the owner allows the property to deteriorate and fails to repair it.
As you can see, a reverse mortgage is a complex loan and should only be taken out after consumers have had an opportunity to carefully consider their financial future and consult with a qualified expert.
In Madigan’s suit, the court is asked to enter permanent injunctions against both companies which will ban them from engaging in deceptive advertising and marketing illegal in Illinois. Consumers are also asked to be reimbursed as well as each defendant to pay civil penalties of $50,000, with additional penalties of $50,000 for each fraudulent act committed, and a $10,000 penalty for each act committed against a person 65 years or older.
For over 25 years, Jonathan Ginsberg has represented honest, hardworking men and women facing financial troubles.
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