Massachusetts AG sues HomeTap above ‘illegal reverse mortgage’
The lawsuit
Attorney -General Andrea Joy Campbell The lawsuit tightened this week in Suffolk County Superior Court. The lawsuit claims that HomeTap has hidden the “high costs and nature” from its contract products for equity, which are also known as Home Equity Investments (Heis).
“In the midst of a growing affordability crisis, our court case claims that home juice deliberately hunted financially vulnerable homeowners for profit, dissected them from their hard -earned equity and brought them an unreasonably high risk of shielding,” said Campbell in an announcement of the submission.
“Our lawsuit not only tries to keep HomeTap responsible for its illegal practices, but also to inform other companies that my office will constantly try to protect communities against predatory business practices.”
Under the core issues, the AG claims that home juice charges “illegally high interest rates” and offers “fast cash” to its customers without “assessing financial factors, such as income, employment and other assets than their home.”
The company ‘deliberately brings its product to the market for’ home -rich, cash poor ‘homeowners who have considerable equity, but insufficient income or other assets, including the elderly, pensioners, people with low credit scores and people with unpaid credit cards, study loans, or Other debts, “Campbell claims.
‘Illegal reverse mortgage’
Contract products for equity have no minimum age requirements, a most important difference between these offers and reverse mortgages.
In the US, the Federal Housing Administration (FHA) ‘s Home Equity Conversion MortGage (HECM) program has a minimum age requirement of 62. Effectable products that are directly offered by reverse mortgage providers have age requirements that in some cases fall to 55.
Although HomeTap claims that his product range is an “investment” and does not form a loan, the Campbell office claims to offer homeapbell that home cap offers an “illegal inverted mortgage”, which she says it is supported by the functions of the product.
“An inverted mortgage is one or more claims for money that is only insured by the primary stay of a borrower, based on the equity or future valuation of the property, which does not require payments until the loan is due, all of which [attorney general’s office (AGO)] Asserts are characteristics of HomeTap’s Hei, “the office said.
That is why HomeTap has not complied with the requirements of Massachusetts that arrange reverse mortgage activities in the state, the office claims. These requirements include (but are not limited to) reserving reverse mortgages for people who are at least 60 years old, a cancellation period of seven days and a counseling requirement of third parties.
“The AGO claims that the behavior of HomeTap consumers deprive of important protection against losing their homes, because the only legally reverse mortgage loans that are available in the Commonwealth are only due when a borrower moves, sells, the house, the standard values or dies , “, the office explained,” the office said, “.
The suit also claims that HomeTap is concerned with “misleading” marketing practices, including “penetrating obscur[ing] The devaluation of the equity of homeowners during his marketing material. “The AGO claims that” the product is actually much more expensive for homeowners than its marketing suggests. “
RMD set out his hand to HomeTap for comment on the court case.
“HomeTap believes determined in the integrity of our products and the financial flexibility they offer to homeowners from Massachusetts,” the company said in a statement. “We have pursued every possible way to enter into a constructive dialogue with the office of the Massachusetts Attorney General. Unfortunately, those efforts have not been answered and we believe that they are pursuing an unfounded lawsuit based on deserving claims. “
The equity contract industry has been intensification in recent months. A lawsuit against another provider in the state of Washington claims in the same way that these products have stripped a reverse mortgage of the essential guarantees that are intended to protect homeowners, “said the perspective of a lawyer who represents the claimants in that case.
In January, under the leadership of former director Rohit Chopra, the CFPB published a report that looks closer to contracts for equity and repeatedly comparing their product functions to reverse mortgages.
The agency also submitted an amicus assignment in a lawsuit in New Jersey and stated that a position of a house on equity counts as a residential mortgage, and it was often intended to confirm that perspective with comparisons with reverse mortgages.
