Facts

American Advisors Group (AAG), a national mortgage lender, offers and provides reverse mortgages, targeting consumers 62 years and older. Reverse mortgages allow homeowners to borrow money using their home's value as security for the loans. Key to this system is the value of the home: the bigger the difference between the appraised values of the home versus the existing mortgage, the larger the funds a homeowner could obtain through the reverse mortgage. AAG would send consumers mailers with estimates of their homes' values that turned out to be inflated, which potentially induced homeowners to contact AAG about reverse mortgages when they otherwise might not have done so. The Consumer Financial Protection Bureau, the government agency charged with regulating consumer financial laws, filed suit against AAG.

PLAINTIFF'S CONTENTIONS: Plaintiff contended that defendant's actions were deceptive and violated the Consumer Financial Protection Act and a previous administrative consent order entered by the Bureau against plaintiffs. Specifically, defendant inflated home values by about 18 to 28 percent and the manner it presented the information on its mailers were misleading and done so to entice consumers. Also, AAG's statement on the mailers that it "made every attempt to ensure the home value information provided is reliable" was false as AAG made no real attempt to do so.

DEFENDANT'S CONTENTIONS: Defendant denied all contentions.

Result

Through the proposed consent order, the case would settle for $1.3 million, AAG would also have to stop advertising the allegedly inflated estimated home values to consumers, and would have to refer its customers to certain CFPB materials on reverse mortgages.