Four reverse mortgage sellers told: Cease and desist

The Massachusetts Division of Banks has issued cease-and-desist orders against four licensed mortgage lenders and brokers who offered reverse products in violation of state law, the division announced today.

Reverse mortgages are loans that enable senior homeowners, typically 62 years and older, to convert the equity in their home into income. State law prohibits a lender from making a reverse mortgage without a plan that has been approved.

“The popularity of reverse mortgage products has risen substantially in recent years. However, these products are extremely complicated and every effort should be made to obtain independent legal and financial advice when considering one,” Commissioner of Banks Steven Antonakes said in a statement.

Of the actions taken today, three were against licensed mortgage lenders for making reverse mortgage loans to Massachusetts seniors without an approved plan. The companies were Massachusetts’ Division of Banks has issued four cease and desist orders against licensed mortgage lenders and brokers who offered reverse products in violation of the state’s reverse mortgage statute, the division announced today.

Reverse mortgages are loans that enable senior homeowners, typically 62 years and older, to convert the equity in their home into income. State law prohibits a lender from making a reverse mortgage without a plan that has been approved.

“The popularity of reverse mortgage products has risen substantially in recent years. However, these products are extremely complicated and every effort should be made to obtain independent legal and financial advice when considering one,” Commissioner of Banks Steven L. Antonakes said in a statement.

Of the actions taken today, three were against First Call Mortgage Company, Inc., Sun West Mortgage Company, Inc., and Gold Reverse, Inc. for making reverse mortgage loans to Massachusetts seniors without an approved plan.

In the case of First Call Mortgage, the company was also cited for unfair and deceptive practices for altering mortgage loan documents and misrepresenting applicants’ incomes. All three companies have been prohibited from accepting any new mortgage applications and have been ordered to place all pending applications with a qualified lender at no cost to the consumer. The companies were ordered to provide the state with copies of files for all reverse mortgage loans.

The Division also issued a cease-and-desist order against American Advisors Group, a licensed mortgage broker, for engaging in unfair and deceptive advertising practices. American Advisors Group engaged in a direct mail campaign in which reverse mortgage loans were marketed as government benefits, according to state officials.

The order forbids American Advisors Group from initiating any new mortgage loan transactions and requires pending applications to be placed with a qualified lender. In addition, the company has been ordered to cease its advertising in Massachusetts and give the state a complete list of all individuals to which its direct mail advertisements were sent.

Last month, the Patrick administration launched a new reverse mortgage web site for seniors, which can be found here.
(By Jonnelle Marte, Globe Correspondent)