On February 19, a complaint was filed by the Massachusetts State Attorney General (AG) alleging that a real estate investment services company and its affiliate engaged in “systematic and pervasive unfair or deceptive acts and practices” with its “novel” product. According to the AG, this product, referred to as a Home Equity Investment (HEI), was an unlawful reverse mortgage loan rather than an investment. The complaint asserted this product’s marketing was deceptive since it allegedly misled consumers into believing it was not a loan and obscuring the true costs involved, which were significantly higher “than any common mortgage product on the market.” The product was described as a risky lending option, secured by a mortgage on residential property, which allegedly posed significant financial risks to consumers. It was alleged that the underwriting process failed to adequately assess the homeowner’s ability to repay, leading to potential foreclosures or forced sales of homes. The complaint highlighted that over 500 financial transactions between the company and consumers have been affected by these practices.
The AG seeks (i) preliminary and permanent injunctive relief to prevent further violations; (ii) restitution to consumers for losses incurred; (iii) disgorgement of profits obtained through these practices; and (iv) the imposition of penalties, costs and attorneys’ fees. Additionally, the complaint called for the reformation of contracts to restore alleged consumer losses and a declaration that the product is an unlawful mortgage loan and subject to the Massachusetts Criminal Usury Statute.
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