Nrmla Ethics Committees Note To Lenders: Mind Your Advertising

For a senior facing serious cash flow issues, there are usually limited solutions

. If they own their home, they may often attempt to sell that home and then hope there is enough left over to cover the expenses that they are facing.

In an uncertain real estate market, that solution is an almost unrealistic one, puttng a home on the market and hoping that it actually sells for or near the price that is being asked and often needed. Meanwhile, the bills and expenses continue to build up for the senior who may be quickly overwhelmed.

Enter the concept of the Reverse Mortgage Calculator. While the benefits are numerous and obtainable, there are some real considerations that have to be taken before the senior signs the forms to commit. Like other banking transactions and financial products, there are still some costs that are involved; however, these costs are included in the life of the loan, which makes them not out-of-pocket expenses, rather than no fee. And that is where the serious concerns of the NRMLA Ethics Committee come in.

There have been a number of advertisements that may be deemed misleading. These advertisements, which have been decried as deceptive at best, have come in the form of direct mail pieces to seniors and those who have influence over a seniors decisions. The mailings, which are nothing more than marketing ploys, are disguised to look as if they have come from an official source, including from the United States government.

The Federal Trade Commission may seek out civil penalties against any and all entities that are involved in these deceptive advertisements, including those who engage in a listing of nineteen different types of misrepresentation in areas that can include the fees, the costs, the obligations and all other aspects of credit related to the reverse mortgage and other financial products marketed to senior citizens. Other entities are also working to protect seniors in this regard, including a number of social service and advocacy groups.

While overall complaints in relation to the reverse mortgage are down substantially in 2010, the majority of the complaints that continue to come in are directly related to deceptive advertising practices.

The Ethics Committee, with the assistance of Legacy Reverse Mortgages President, Jim Cory, who serves as Vice Chairman of the committee, specifically addressed six advertising acts in the Code of Ethics. It is important to note that these acts violate not only the Code of Ethics but could potentially violate state and federal laws as well. These acts include the use of celebrities without their permission, advertisements that say the senior has been pre-approved, improper references to stimulus money, simulated checks and using the HUD logo on mailers as well as making broad statements that suggest that the reverse mortgage is a no fee or no cost financial product. There is a difference between the costs being absorbed into the loan and not being paid at alla difference that needs to be honestly and openly presented.

by: Leonard H. Franklin

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