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There were a total of 298 consumer complaints submitted to the Consumer Financial Protection Bureau (CFPB) in 2024 that were related to the reverse mortgage industry, according to a database maintained by the bureau. This was 63 fewer complaints than in 2023.
Of the total, about 43% were related to “trouble during the payment process.” This typically has to do with customers seeking to contact their lender or servicer to fix an issue with the management or servicing of a loan.
Roughly one in three complaints had to do with borrowers “struggling to pay their mortgage,” and nearly half of this share were related to addressing foreclosures. Most of the other half stemmed from “trying to communicate with the company to fix an issue related to modification, forbearance, short sale, deed-in-lieu, bankruptcy, or foreclosure,” according to the database.
About 13% of all complaints were related to applying for a loan or refinancing an existing one. Most of these issues stemmed from an attempt to communicate with the company to fix some kind of an application issue. And about 10% of the total share of complaints were related to issues with loan closings.
Of the 298 complaints, 217 were logged with the bureau online and 56 were taken over the phone. Another 18 were referred and seven were handled via traditional mail.
Among the nation’s top 10 reverse mortgage lenders, Onity Group Inc. — the parent company of PHH Mortgage Corp. and Liberty Reverse Mortgage — had the largest number of complaints last year at 95. It was followed by Finance of America (27), Longbridge Financial (11) and Mutual of Omaha Mortgage (8). Eight complaints were attributed to American Advisors Group (AAG), a company absorbed by FOA.
The overwhelming majority of complaints (98%) were “responded to in a timely manner,” and a similar share were closed “with explanation.” Only 14 complaints logged last year remained in progress as of Friday, Jan. 24. Only one complaint was closed with monetary relief for the complainant.
Peer Advisors LLC — the parent of reverse mortgage servicer Celink — received 51 complaints, second overall to Onity Group. In mid-2023, the CFPB released a report that showed a higher average share of monthly reverse mortgage complaints between 2020 and 2022, and the bureau suggested this could be attributed to recent changes on the servicing side of the business.
“In their complaints about reverse mortgages, consumers often express frustration in either getting statements or a payoff amount from their lender, or state that they are having difficulties making a payment or paying off a mortgage,” the bureau explained in the report.
“In their responses, companies will sometimes apologize for the delay and provide the requested information. In other responses, companies will request follow up information from consumers.”
Reverse mortgages once again encompassed only a small share of all consumer complaints levied at the broader mortgage industry. The reverse share accounts for 1.4% of the 21,236 complaints received by the mortgage industry at large, with the largest number of complaints tied to the conventional mortgage space (12,853).
Reverse mortgage complaints were on a steady downward trend from January 2016 (562) through January 2020 (247), before spiking to 425 by January 2022. But they are back on a downward trend.
While the number of complaints against reverse mortgages may have gone down the percentage of complaints to active endorsed HECM may have gone up. Remember 6 divided by 100 is 6% but 6 divided by 50 is 12%.
Here is what has happened to the number of unassigned and active HECMs accounted for in the MMIF and the GI & SRI Fund (commonly referred to as the total HECMs held by mortgagees). That total has gone from a monthly high of 629,238 on July 31, 2014 to 305,063 as of October 31, 2024 (the latest data on this total from HUD as of 1/24/2025), which is a 52% drop in a little over a decade.
What has caused the 52% drop. The answer is that the total of monthly payoffs, assignments, and short pays in both funds over the last decade have been generally exceeding the HECM endorsements (in the MMIF) in the those same months. So why has this happened? The answer is not higher interest rates. In fact, according to the Federal Reserve the average long-time average of 10 year CMTs is 4.5%, very close to what that is as of 1/24/2025.
Both of the actual problems are much more difficult to deal with. The first is the change to PLFs that took place on 10/2/2017 under the first Trump Administration. The second is a general distrust of this industry by not only seniors but also their financial advisers, whether a CFP or the postman. We have recently seen evidence of this from both forward originators as well as financial advisers.
Rather than running down a tangent, lower HECMs in HUD’s portfolio means that having a similar number of complaints year to year means that the percentage of complaints to HECMs in the portfolio is likely to be twice the size it was ten years ago.
Rather than reinventing the wheel, someone more familar with the number of complaints over the years needs to add that data for completeness and a clear picture of the facts and circumstances of this issue in 2024 versus 2014.