NRMLA President: CFPB Report Comprehensive, But No Surprises

The study issued by the Consumer Financial Protection Bureau is a well-written, comprehensive analysis of the reverse mortgage program, but in terms of key findings and recommendations, there is nothing new contained within it that NRMLA or the industry is not already aware of, or working to improve, President and CEO Peter Bell told nearly 200 members during a webinar this week.

Although there are some conclusions that NRMLA doesn’t agree with, the study overall is well-balanced and members should take time to read it this summer, said Bell. 

One of CFPB’s objectives was to identify and assess consumer protection concerns, yet not one reverse mortgage borrower was interviewed. Much of the information obtained for the study came from previously published materials and interviews with lenders, counselors and consumer advocates.

One concern raised by the CFPB is that half of the borrowers are under 70 and that increasingly many of them are using the loan proceeds to pay off traditional mortgages. The CFPB believes that if younger borrowers use most, if not all, of the loan proceeds to refinance out of a traditional mortgage, they may not have the financial means to deal with health-related issues later on in life. Nevertheless, when a person reads the HECM statute, Bell said he sees no conflict with any of these trends and Congress’ intent for creating the program.

The study also said consumers are subject to increased risk because the reverse mortgage market is dominated by small, non-depository institutions.  During the Q&A, several members asked whether NRMLA found that statement alarming. Bell said yes, because there was no evidence provided to support the claim.

Bell said the association will be submitting comments to CFPB on these issues and providing input on other questions raised by the agency, including factors influencing consumer decisions; consumers’ use of reverse mortgage proceeds; the longer term outcomes of reverse mortgages; and the differences in market dynamics and business practices among the broker, correspondent and retail channels.

In his concluding remarks, Bell urged members to submit their own responses to these questions. The submission deadline is August 31.