A HECM loan is a loan made or originated by a lender. The FHA insures a lender’s HECM loan against certain losses, but it is still the lender’s loan and not an FHA or a government loan. Accordingly, a suggestion in such a communication by a NRMLA Member that such a loan is made by the Government or by FHA, rather than by the NRMLA Member, is Unethical Advertising. The FHA provides certain insurance benefits for lenders and borrowers in connection with the lender’s HECM loans; the FHA does not make or originate that HECM loan. Examples of such Unethical Advertising include the following, among other similar marketing and advertising pitches related to a NRMLA Member’s particular FHA-insured HECM loan programs: “Notice: 2007 Government Benefits Increase;” “Notice of 2007 Funding Increase for Seniors;” “or “Information is offered to you as a public service.” A HECM loan is not funded by or a benefit of the Government. An increase by the FHA in the maximum permissible HECM loan limit that it will insure may not result in an increase in the loan amount of any particular HECM loan originated by a NRMLA Member. It is Unethical Advertising by a NRMLA Member to suggest otherwise. Second, it is a violation of the NRMLA Code of Ethics for a NRMLA Member directly or indirectly to state or suggest that a failure to respond to its marketing or advertising will or may result in a loss to the consumer of any consumer benefit to which the consumer is or may be entitled or enjoying. An example of such Unethical Advertising includes the following, among other similar marketing and advertising pitches on behalf of a NRMLA Member: “Before you can benefit from this program, you must call this toll-free number to verify” this or that. Third, it is a violation of the NRMLA Code of Ethics for a NRMLA Member to make misleading or unfair or exaggerated claims of benefits to consumers, particularly if coupled with inadequate (or with no) description of related costs or risks. An example of such Unethical Advertising includes the following, among other similar marketing and advertising pitches by a NRMLA Member: “We [the lender] pay off your mortgage;” or “Works as a living trust.” Fourth, it is a violation of the NRMLA Code of Ethics for a NRMLA Member to provide or arrange for a testimonial or endorsement or infomercial that fails clearly to disclose the nature of the relationship (including, if applicable, that a payment has been made as part of the relationship) between the NRMLA Member and the person or entity providing the testimonial or endorsement or infomercial. This disclosure requirement is effective for any such communication developed after the publication of this Ethics Advisory Opinion. Fifth, it is violation of the NRMLA Code of Ethics for a NRMLA Member to require or suggest that a product or service (such as an annuity or investment product or life or long-term care insurance), other than the reverse mortgage loan, also must be purchased in order to obtain the reverse mortgage loan, or if such product or service (if offered by the NRMLA Member) may not, itself, provide a bona fide advantage to the consumer, or if the NRMLA Member’s compensation in connection with all such products and services is unreasonable in amount or not clearly and timely described to the consumer. 14
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