Magazine article Mortgage Banking

FHA Warns about Deceptive Reverse-Mortgage Marketing

Magazine article Mortgage Banking

FHA Warns about Deceptive Reverse-Mortgage Marketing

Article excerpt

On June 19, the Federal Housing Administration (FHA) published a mortgagee letter reinforcing the FHA's prohibition against misleading or deceptive advertising regarding its reverse-mortgage program. The guidance issued to lenders reminds participants in the FHA's Home Equity Conversion Mortgage (HECM) program to make certain that senior borrowers are fully informed of their options when applying for these loans.

FHA Commissioner Carol Galante said, "Senior borrowers deserve freedom of choice when considering whether a reverse mortgage is appropriate for them." She added, "This guidance is intended to make sure lenders know we're keeping a watchful eye on their marketing and advertising practices that might steer borrowers toward reverse-mortgage options that limit their available choices."

A press release announcing the mortgagee letter noted, for example, that all advertising and marketing materials used to promote the HECM program must include a "prominently displayed disclaimer that clearly informs the public that such materials are not from HUD [the Department of Housing and Urban Development] or FHA and the document was not approved by the department or government agency. …

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