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Despite Language Confusion, Oregon Reverse Mortgage Ad Law Applies Widely

Oregon lawmakers passed new restrictions on what reverse mortgage professionals can and can’t say in marketing materials — and despite what some eagle-eyed readers thought could be a loophole, experts confirm that the law applies to a wide swath of Home Equity Conversion Mortgage players.

The new legislation, signed into law by Gov. Kate Brown, will require HECM ads to include clear, detailed information about the products, including what happens when the loan comes due, the fees that the borrower will pay, and the fact that the mortgage balance grows over time.

And that can’t be fine print: House Bill 2562 requires this information to appear in a “clear and conspicuous” format, which Oregon defines as written in larger print than surrounding ad copy, presented in a different contrasting color, or separated from other text on the page. In television and radio ads, the disclosures must be “spoken in a volume and cadence that is sufficient to enable a reasonable person to hear and understand.”

But a few folks poring over the legislation found what they thought was a way out: a bracketed, italicized section on the second page that says the key sections of the legislation wouldn’t apply to financial institutions, mortgage bankers, or mortgage brokers. If it seemed like a curious addition to a law designed to regulate advertising, that’s because it didn’t apply in the final version.

“The brackets, however, indicate that the language is being omitted from the bill,” Jenny Werwa, the director of public relations for the National Reverse Mortgage Lenders Association, wrote in an e-mail to RMD last week. 

Werwa pointed to an analysis from Weiner Brodsky Kider, the Washington, D.C.-based trade group’s outside counsel, which noted that depository financial institutions such as banks remain exempt under Oregon’s law, but non-bank lenders must follow the new advertising restrictions. In addition, servicers are required to notify borrowers of property tax requirements 60 calendar days before the due date — unless the borrowers have a dedicated set-aside account that covers such payments.

Written by Alex Spanko