The number of consumer complaints to the Consumer Financial Protection Bureau (CFPB) related to the reverse mortgage product category at first saw a brief spike, but now appears to have slowed during 2022, RMD has learned.
This is according to an analysis of the CFPB Consumer Complaint Database for data collected by the agency between January and August 2022. The average monthly rate of complaints so far this year stands at roughly 35, but a spike during one month appears to have tapered off, and the average still stands lower than the average figure observed late last year which also served as an overall spike during the COVID-19 coronavirus pandemic period.
Number of reverse mortgage complaints in 2022
According to the CFPB Consumer Complaint Database, a total of 314 consumer complaints about reverse mortgages have been submitted to the CFPB since January 1. In the fully recorded period between August of 2017 — when the agency started tracking the data at this level of detail — and January 2022, a total of 1,823 reverse mortgage complaints have been documented by the agency.
When averaged, the number of monthly reverse mortgage complaints stood at just over 39. However, that average is also affected by a notable spike in reverse mortgage complaints recorded by the agency during the month of April, which reached 54. Since that point, the number of reverse mortgage-related complaints has been steadily decreasing each successive month, from 42 received complaints in May to 29 in August.
While the nature of the complaints again varied, the predominant topic on the majority of those received by the CFPB centered on “trouble during the payment process,” which made up 130 complaints or 41% of the total. “Struggling to pay mortgage” was the next most common reason at 67 complaints, or 21.3% of the total. “Applying for a mortgage or refinancing an existing mortgage” was not far behind, making up 57 complaints or (18.1% of the total). This was followed by “closing on a mortgage,” making up 55 complaints (17.5%).
In terms of the locations of the complaints recorded in 2022, California once again featured the most reverse mortgage-related complaints in the country, with 70 having been recorded in the state this year. They were followed by Florida (37), Texas (24), Illinois (17) and New Jersey (11) rounding out the top five. Maryland, Massachusetts and North Carolina all tied for sixth place with 10 complaints each.
How 2022 affects pandemic-era complaints
Between August 2017 and February 2020 — one month prior to the declaration of a pandemic by the World Health Organization (WHO) and a national emergency by the White House under Former President Donald Trump — the number of reverse mortgage complaints received by the CFPB averaged out to roughly 30 complaints per month. Since the onset of the pandemic in March 2020 through the end of August 2022, the monthly average over the majority of the pandemic period sits slightly lower at 29.6 per month.
During the ongoing pandemic period, the single month with the highest number of reverse mortgage complaints was April 2022, outdoing the prior record set in November 2021 of 51 complaints recorded by the CFPB.
Relief programs
With 21.3% of the total complaints once again centering on a struggle to pay costs associated with a reverse mortgage, the nature of existing borrower relief remains an important issue to cure potentially delinquent reverse mortgages.
With the passage of the American Rescue Plan Act in 2021, a $10 billion Homeowners Assistance Fund (HAF) was set up to provide financial relief to mortgage borrowers who have been negatively impacted by the current economy. Reverse mortgage borrowers who have issues paying associated fees such as taxes and insurance qualify for such relief.
However, getting the word out to reverse mortgage borrowers has proven to be difficult across the board: for the U.S. Department of Housing and Urban Development (HUD), for reverse mortgage lenders and servicers, as well as consumer protection advocates.
“These HAF programs in all of the states and territories and tribal lands can play a very important role in helping reverse mortgage borrowers who have fallen behind on their property charges, especially the ones that have fallen behind during the pandemic,” said Sarah Bolling Mancini, staff attorney with the National Consumer Law Center (NCLC) during a meeting of the HUD Housing Counseling Federal Advisory Committee held last month. “So, that’s an important source, but it is not going to be a silver bullet, unfortunately, for a number of reasons.”
Some of the barriers she mentioned include the idea that states which still offer HAF relief applications do not adequately publicize the qualification of reverse mortgage borrowers, and the entirely online process of a HAF application may also serve as a barrier for reverse mortgage borrowers who were at least age 62 at the time their loan was originated.
Originators and getting HAF relief to reverse mortgage borrowers
At a reverse mortgage industry event in May, servicing professionals addressed an audience of industry professionals and explained that loan originators may be best suited to inform borrowers about their ability to seek HAF funds if they need relief.
“We have done everything we can possibly think of,” said Gail Balettie of Celink in May about getting the word out to reverse mortgage borrowers. “I’ve had HAF messaging on my statements since January, we do outbound phone call campaigns, we have it on our website, we do email campaigns, everything other than hiring homing pigeons.”
Visit the CFPB Consumer Complaint Database.
