The CFPB issued a press release highlighting key findings and concerns from its study on reverse mortgages. The CFPB noted that while only a small number of eligible borrowers currently participate in the reverse mortgage market, market growth is likely as aging baby boomers continue to become eligible for reverse mortgages. As a result of the study, the CFPB noted some areas of concern, mainly that consumers do not understand the product, (e.g., that consumers are responsible for property taxes and insurance), and that consumers are not using the product as originally intended (i.e., opting for a lump sum payment instead of using it as a stream of income or line of credit), which may leave them with insufficient resources later on. This latter concern is compounded by the additional finding that many consumers are obtaining reverse mortgages earlier in life. To address its concerns regarding the confusion about reverse mortgages, the CFPB has developed a fact sheet and consumer guide with information about reverse mortgages, as well as posted reverse mortgage Q&A’s to the Ask CFPB database.
In the study, the CFPB also outlined ways that it can address the issues raised in the report. Specifically, the CFPB noted that it can issue regulations specifically addressing reverse mortgages, improve approaches in engaging consumers about reverse mortgages, monitor the reverse mortgage market for compliance with existing laws and for unfair, deceptive, or abusive practices, accept and work to resolve consumer complaints, and work with HUD to resolve issues noted in the report. The CFPB issued a notice and request for information seeking feedback from the public to assist the CFPB in better understanding and evaluating potential consumer protection issues raised by reverse mortgages. Specifically, the CFPB is seeking answers to a series of questions in the following areas: (1) factors influencing consumer decisions; (2) consumer use of reverse mortgage proceeds; (3) the longer-term outcomes of reverse mortgages; and (4) the difference in market dynamics and business practices among the broker, correspondent and retail channels.