Reverse Mortgage Loan Compliance Guide Reverse Specific Required Content Checklist
Reminder: Content In Ad Reverse Mortgage Loan
Tax Free/ Tax Related
Please submit all Reverse marketing and compliance approvals to reversemarketing@fairwaymc.com
Required Change Or Additional Language “Reverse Mortgage Loan” must be used often in place of “Reverse Mortgage.” Particularly in prominent headings and the first time it is mentioned in an ad. According to the FTC, “reverse mortgage loan proceeds are usually not taxable” (emphasis added). For that reason we only say: “The loan proceeds are usually tax free.*” This requires an additional disclaimer as follows (disclaimer needs to be “Clear and Prominent” and in a font that can be read by seniors: *This advertisement does not constitute tax advice. Please consult a tax advisor regarding your specific situation.
No Monthly Mortgage Payments
Correct Loan Officer Titles
If this statement is made, the ad must say “Borrower is still required to pay property taxes, homeowner’s insurance, and maintenance (and HOA fees, if any).” It is not permissible to simply state “no monthly payments.” Describing loan officers as experts or counselors acting in the customer’s interest, and not sales people, is prohibited. Acceptable Titles Include (depending on your role at Fairway): Loan Officer; Mortgage Loan Originator; Reverse Mortgage Planner; Reverse Mortgage Specialist; Senior Loan Officer; Branch Manager; Area Manager; Sales Manager; Mortgage Advisor, Retirement Mortgage Specialist and Certified Reverse Mortgage Professional (If certified by NRMLA) (NOTE: Compliance maintains a list of acceptable and prohibited titles – when in doubt please contact legal@fairwaymc.com).
FHA-Insured
If details are given about FHA insurance, be accurate and indicate that it insures that payments due the consumer post-closing will be made if the lender fails to do so and nothing more.
Description of Loan Qualification Factors
Any description of loan qualification factors must be accurate. There are minimal credit and property requirements necessary to qualify for a reverse mortgage.
Dream Life Concept, Vacation Images, Luxury Purchases
Avoid suggesting that the consumer use reverse mortgage loan proceeds for extravagant purposes (e.g., trip to Europe or RV purchase).
Interest Rates and Fees
Disclosure of interest rates and fees may trigger the requirement to disclose a correctly calculated Annual Percentage Rate (APR).
Suggesting Use of Loan Proceeds to Eliminate Existing Debt
Do not state that the borrower will be debt-free after getting a reverse mortgage. Suggesting that the borrower replace one debt with another is not a permissible advertising practice. The exception is that existing mortgages secured by the residence must be repaid upfront.
Income
A reverse mortgage loan or growing credit line is not considered income. Use words such as cash flow, reserves, loan proceeds, or money.
Down Payment
Add the following disclaimer: The required down payment on your new home is determined on a number of factors, including your age (or eligible non-borrowing spouse’s age, if applicable); current interest rates; and the lesser of the home’s appraised value or purchase price.
Never Owe More Than the Home is Worth
Add the following disclaimer: There are some circumstances that will cause the loan to mature and the balance to become due and payable. Borrower is still responsible for paying property taxes and insurance and maintaining the home. Credit subject to age, property and some limited debt qualifications. Program rates, fees, terms and conditions are not available in all states and subject to change.
Financial Advice/ Financial Related
When financial language is used add the following disclaimer: This advertisement does not constitute financial advice. Please consult a financial advisor regarding your specific situation.