New York Attorney General Eric Schneiderman has announced a settlement with reverse mortgage lender New View Mortgage Corp. for misleading direct mail marketing sent to 10,000 area seniors.
New View Mortgage Corp., a mortgage broker and banker based in the Long Island town of Woodbury, New York, faces a penalty of $12,500, according to Schneiderman’s office, for direct mail solicitations that were designed to look like official government notices from the Federal Housing Administration. Company founder Corey Margulefsky was named by the AG’s office in its correspondence. [New View Mortgage is in no way affiliated with the consulting firm New View Advisors.]
According to the settlement, the direct mail advertisements included envelopes that read “Economic Stimulus Notice,” and “Government Lending Division,” made to look like they were sent by government agencies.
“Making New York more affordable for the middle class includes protecting consumers from false and misleading advertising practices,” Schneiderman said in a press release. “Our office will hold companies accountable when they seek to rip off or defraud seniors and require them to comply with the letter of the law.”
In November 2013, the company engaged Nevada-based marketing company Best Rate Referral to identify potential borrowers aged 62 and older who owned homes in the geographic regions served by New View Mortgage, according to the settlement. Best Rate Referral then sent the solicitations on behalf of New View Mortgage.
An additional description of the mailer by the attorney general pointed to a one-sided portrayal of reverse mortgages including “facts” presented about the benefits of the loans, without mention of their risks. An example cited by the attorney general’s office emphasized “No Monthly Mortgage Payments Required Ever!” but included no mention of ongoing tax and insurance payments. Other language included the statement: “Your Heirs WILL inherit all remaining equity,” but failed to note that heirs are required to pay off the mortgage in order to keep the home, Schneiderman noted.
“While reverse mortgages may allow seniors to stay in their home without making mortgage payments, they are not necessarily the best option for all homeowners,” the office states. “Fees and other charges can be high in some cases. There are often less costly and more appropriate options available.”
According to the settlement, there were no loans closed as a result of the marketing piece.
The Department of Housing and Urban Development recently published a mortgagee letter warning lenders against misleading and deceptive reverse mortgage marketing practices.
View the announcement of the settlement.
Written by Elizabeth Ecker