Olympia – The Consumer Services Division of the Washington State Department of Financial Institutions (DFI) has charged HighTechLending of California with targeting Washington seniors age 62 and older with reverse mortgage offers using false, deceptive, and misleading advertising. DFI highlighted the fact that HighTechLending falsely represented that borrowers could stay in their homes for life without making monthly payments and downplayed the risks of default and foreclosure. The Statement of Charges seeks a final order requiring the company to cease and desist from engaging in false advertising practices, pay a $300,000 fine, and pay an investigative fee. View copy of the Statement of Charges.
“We will not tolerate deceptive advertising of reverse mortgage products to Washington residents,” DFI’s Director of Consumer Services Charlie Clark said. “Washington’s seniors need to be well informed about reverse mortgages before taking out such loans, and there is no place in our state for reverse mortgage advertisements that are false or misleading.”
Reverse mortgages are loans offered to homeowners who are 62 or older who have equity in their homes. The loan programs allow borrowers to defer payment on the loans until they pass away, sell the home, or move out. Homeowners, however, remain responsible for the payment of taxes, insurance, maintenance, and other items. Nonpayment of these items can lead to a default under the loan terms and ultimate loss of the home.
DFI charged HighTechLending with using deceptive solicitations, brochures, Internet websites, YouTube videos, and Facebook pages to promote the Federal Housing Administration’s (FHA) Home Equity Conversion Mortgage (HECM) reverse mortgage program. However, the DFI alleged that in most of the company’s marketing materials, which were relied on and used by its eight Washington-licensed branches, HighTechLending misrepresented HECM loan terms and failed to disclose the risks of default and foreclosure.
“Besides misleading consumers,” Clark said, “false advertising harms competition and takes business away from law-abiding mortgage brokers and consumer loan companies.”
In 2017, the U.S. Department of Housing and Urban Development announced that since fiscal year 2009, losses in FHA-insured reverse mortgages have climbed to $11.7 billion due to defaults and foreclosures in HECM reverse mortgages. Existing state and federal law requires that lenders market HECM loans with truthful, accurate information so borrowers will hopefully not lose their homes through non-payment of taxes or insurance. The DFI is informed that since the outset of its investigation, HighTechLending has adopted policies and procedures designed to prevent HECM advertising violations.
NOTE: The Consumer Loan Act authorizes the Director to file charges against companies and individuals believed to have violated the Act. The charges are not a finding or order that the respondents have actually violated the Act; the named respondents have the right to request an administrative hearing on the charges