CFPB examines reverse mortgage marketing.
BANKING AND CREDIT NEWS-June 17, 2015-CFPB examines reverse mortgage marketing
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The Consumer Financial Protection Bureau (CFPB) said as a result of a focus group study that left participants with misimpressions on reverse mortgage advertising, CFPB has cautioned older Americans to watch out for confusing or misleading advertising for reverse mortgages.
Using 97 unique ads found on TV, radio, in print and on the Internet, the CFPB interviewed approximately 60 homeowners age 62 and older in focus groups and in one-on-one interviews. The study found that many of the ads were incomplete and/or contained inaccurate information. While advertisements in general frequently do not describe all the details of the particular product or service being sold, the incompleteness of reverse mortgage ads raises heightened concerns because of the vulnerability of the target audience, says the CFPB.
Some consumers found it difficult to understand from the ads that reverse mortgages are loans with fees and compounding interest; that the loans need to be repaid. Most ads either did not include interest rates or included interest rates in fine print. Other consumers thought that because the money they received through a reverse mortgage represented home equity they had accrued over time, there was no reason they would have to pay it back.
The advertisements left some older homeowners with the false impression that reverse mortgages are a risk-free government benefit, and not a loan. The study found that consumers often misinterpret the role of the federal government in the reverse mortgage market as providing consumer protections that are not actually offered.
The study found that some consumers did not pick up on key aspects of the mortgage because the requirements were often buried in the fine print if they were even mentioned at all. Many reverse mortgage ads reviewed did not, for example, mention helpful information like interest rates and repayment terms.
Many ads featured celebrity spokespeople discussing the benefits of reverse mortgages without mentioning the risks. Most consumers recalled TV ads that featured spokespeople portrayed as reliable and trustworthy.
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|Publication:||M2 Banking & Credit News (BCN)|
|Date:||Jun 17, 2015|
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