COMBINED-Code of Ethics and Advisory Opinions 02132024

Further, most states mortgage banking rules include laws against unfair, deceptive or misleading advertising practices, and these laws generally also apply to reverse mortgage transactions. In addition, some states have specific prohibitions on deceptive practices in connection with reverse mortgage advertising. For instance, in Illinois, a mortgage lender or broker may not employ fraudulent or deceptive acts or practices in the making of a reverse mortgage loan, including deceptive marketing and sales efforts. 205 Ill. Comp. Stat. Ann. 635/5‐5(b). The North Carolina Reverse Mortgage Act and the Tennessee Home Equity Conversion Mortgage Act also prohibit deceptive acts and practices in connection with reverse mortgages. State Enforcement Actions in Connection with Reverse Mortgage Advertising Several states have taken enforcement actions against reverse mortgage originators over the past few years in connection with faulty reverse mortgage advertising. Some of these enforcement actions have resulted in cease and desist orders and administrative actions. GAO Report on Reverse Mortgage Advertising In June 2009, the Government Accountability Office (“GAO”) reported that only a few regulatory agencies had received only a few complaints about HECM marketing. Nonetheless, the GAO stated that a review of selected advertisements found examples of marketing claims that were potentially misleading because they were inaccurate, incomplete, or used questionable sales tactics. Federal agency officials agreed that some of these advertisements raised concerns. In its report, the GAO noted six potentially misleading claims, and agency officials generally agreed. The concerns raised were as follows: 1. “Never owe more than the value of your home” 2. Implications that the reverse mortgage is a “government benefit” or otherwise not a loan: 3. “Lifetime income” or “Can’t outlive loan” 4. “Never lose your home” 5. Misrepresenting government affiliation 6. Claims of time and geographic limits. Some claims falsely imply that consumers must respond within a certain time to qualify for the loan. Examples include “must call within 72 hours” and “deadline extended.” 36

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