Mass. alleges firms broke mortgage rules

BOSTON – The Mass. Division of Banks has issued cease-and-desist orders against three licensed mortgage lenders and a broker who allegedly made reverse-mortgage loans that violated state statutes.
Three licensed mortgage lenders – First Call Mortgage Co. Inc., Sun West Mortgage Co. Inc. and Gold Reverse Inc. – were cited for making reverse-mortgage loans without an approved plan. State officials said First Call Mortgage is also accused of unfair and deceptive practices for allegedly altering loan documents and misrepresenting applicants’ incomes.
American Advisors Group, a licensed mortgage broker, was cited for engaging in unfair and deceptive advertising. The Division of Banks said the company had a direct-mail campaign in which reverse-mortgage loans were marketed as government benefits.
The four companies are not allowed to accept new mortgage applications and have been ordered to transfer pending applications to a qualified lender at no cost to the consumer.
In addition, the three mortgage lenders have been ordered to provide the state complete copies of files for all their reverse mortgage loans.
And American Advisors Group has been ordered to cease its advertising in Massachusetts and provide the state a complete list of people who received the direct mailings.
Reverse mortgages are loans that enable senior homeowners, typically 62 years and older, to convert the equity in their home into income. Massachusetts law prohibits a lender from making a reverse mortgage without a plan that includes mandatory counseling.
“The popularity of reverse mortgage products has risen substantially in recent years,” said Steven L. Antonakes, Massachusetts commissioner of banks “However, these products are extremely complicated and every effort should be made to obtain independent legal and financial advice when considering one. A reverse mortgage is a loan with high up-front fees, and over time the loan will deplete the accumulated equity in a senior’s home.”
Last month, Gov. Deval L. Patrick’s administration launched a new reverse-mortgage web site for seniors: www.mass.gov/reversemortgage. Massachusetts seniors also can call the Mass. Division of Banks at (617) 956-1500 with reverse mortgage questions.