Reports of misleading advertising by reverse mortgage lenders is an issue that has plagued the industry for some time, but a new advisory opinion published by the National Reverse Mortgage Lenders Association aims to end the behavior.
According to the opinion, a NRMLA member that retains or arranges with a third party to assist in the origination of reverse mortgages – through a lead company or marketing as well – will be held responsible under the association’s Code of Ethics for the actions of third parties undertaken on its behalf. The NRMLA member could be placed on suspension, fined, and or referred to law enforcement authorities.
Going one step further, the NRMLA Wholesale Advisory Council – Reverse IT, Live Well Financial, Genworth Financial Home Equity Access, Generation Mortgage Company, Bank of America and MetLife Bank – has agreed to work cooperatively to help “stamp out unethical advertising practices” through their wholesale channels.
Each lender has agreed to incorporate the NRMLA code of ethics within their third party originator agreements, even if the party isn’t a NRMLA member. In addition, the ethics committee will share information on advertising and marketing materials it finds problematic with the council.
“While the company being investigated will remain anonymous, the Ethics Committee will share actual language or visuals taken from the advertisement,” said the association. “Council Members will investigate to the best of their ability whether any TPOs (or other third-parties) they work with have distributed the same materials, and, if so, to take appropriate and reasonable action.”
To view a copy of the advisory opinion, see here.