One legal expert is saying the Consumer Financial Protection Bureau’s enforcement actions against a non-bank mortgage lender for alleged redlining could signal how the bureau will treat reverse mortgage lenders going forward.
In July, Townstone Financial of Chicago was charged with making statements during marketing ventures, including weekly radio shows and podcasts, that illegally discouraged prospective Black applicants from applying for mortgage loans.
“The CFPB’s recent redlining lawsuit is the first public enforcement action against a non-depository institution,” Tori Shinohara, partner at law firm Mayer Brown, tells Reverse Mortgage Daily
. “Historically, federal regulators have brought redlining cases only against depository institutions and specifically, forward mortgage lenders.
For reverse mortgage companies, regulators have typically criticized lenders for being what they describe as too “aggressive” in marketing techniques, Shinohara says.
“[Regulators] either allege that the reverse mortgage lenders engaged in unfair, deceptive, or abusive acts or practices (UDAAPs) or allege ‘reverse redlining’ – the targeting of majority-minority communities for products that regulators view as predatory,” she says.
Read more about reverse mortgages and redlining