CFPB Reform Bill Introduces Commissioner Who Will Oversee Reverse Mortgages

What the leadership of the Consumer FInancial Protection Bureau will look like isn’t clear, but a bill that is slowly making its way through the House of Representatives shows how quickly things could change for the reverse mortgage industry.

Introduced by Rep. Spencer Bachus (R-Ala.), H.R. 1121, a bill that would reform the CFPB and would establish a five-member commission to govern the agency, passed the Committee on Financial Services last week. Included in the bill is an amendment from Rep. Nydia Velazquez (D-N.Y.) that assigns one commissioner to oversee the bureau’s activities in protecting consumers who are older or are veterans from abusive, unfair and deceptive lending practices.


“The CFPB faces many challenges dealing with the aftermath of the financial collapse that eroded $14 trillion in wealth and saw 7.5 million jobs lost,” said Velazquez during a House Financial Services markup last week. “Strong leadership will be required to address the many aspects of the economy that continue to be plagued by predatory and abusive lending practices.”

To demonstrate the need for such a position, Rep. Velazquez said lenders have been targeting the equity in seniors’ homes with reverse mortgages.

“Over the last decade the number of reverse mortgages has increased more than 1,300%. Unfortunately, this prolific increase of reverse mortgages has resulted in 61% more bankruptcies by Americans over 55.”

A report from the American Bankruptcy Institute cites the 61% figure as the percentage increase of filers ages 55 and over from 2002 to 2007, but fails to mention anything about reverse mortgages. RMD contacted Rep. Velazquez’s office seeking clarification of her statements, but several attempts for comment made by email and phone were not returned as of press time.

Rep. Carolyn B. Maloney (D-N.Y.) voiced her strong support of the amendment, which she said would bring leadership and accountability to the bureau’s new offices for servicemember affairs and financial protection for older Americans.

“To have this additional protection and focus is legitimate and appropriate, and it will only serve to ensure that the CFPB carries out its consumer protection mission with older Americans and with our men and women in the military,” she said.

The amendment added to the bill that passed by a 33 to 24 vote late last week.

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  • “There they go again.”  Almost makes me sound Republican, ugh.

    One thing is for sure, these bills for all of the trouble they could make will not see the light of day.  They will not survive the Senate or even if they do, not one of them will be overturned by a Presidential veto.  In less than 2 months, Ms. Warren will be the first CFPB Director by recess appointment of President Obama. 

  •  I fail to see any correlation between bankruptcies and reverse mortgages. Statistics can say anything you want them to say. What is failed to mention is how many of those bankruptcies are between ages 55 and 62. One other item that is failed to mention (statistically of course) is that the period in ones’ life of most spending is between 55 and 65.

  • Reps Valsquez and Maloney are as their fellow New Yorker Daniel Moynihan observed, “entitled to their opinion, but not their own facts”.Campaigning via contrived and misleading sound bites is bad enough, but governing by them is far worse.

    I’ve never seen any bit of evidence, and this would include the as-yet-unresolved Tax and Insurance technical default issue, that draws any cause and effect link between reverse mortgages and bankruptcies. Based upon her earlier research and reports where increases in medical expenses were identified as the principal cause of bankruiptcy among seniors, Elizabeth Warren herself would strongly rebuke this false conclusion.

  • As far as the statements on the bankruptcies, what does that have to do with reverse mortgages. If anything, reverse mortgages have saved many seniors from having to claim bankruptcies. I do not see anything mentioned about those statistics. Out industry has been a saving grace in that respect! lets look at this great amendment submitted by  Rep. Nydia Velazquez (D-N.Y.), this is absurd. They want to appoint one member of the commission to oversee the bureau’s activities in protecting consumers who are older or are veterans from abusive. One member will be given all of this authority, this is what I call a genuine use of common sense! I can see appointing a three member panel that has NO connection what so ever with the commission to act as an oversight committee but not one of the dreaded wolf squad to act in this position! Things keep getting worse by the day. More regulations, more committees, more government control, when is it all going to end. Things have gone to far, we need to put the breaks on and stand back to analyze what harm is being done, not only to seniors but all American’s. It has come to the point where we can’t keep up with all the changes, the rules and regulations being thrown at our entire financial system. I am one individual that is very disillusioned and fear for the future of our seniors, on all fronts! John A. Smaldone

  • Rep Velazquez is guilty of one of the most common statistical errors around.  Correlation is not causation.  Simply put, just because two things move the same direction at the same time does not mean one caused the other.

    Contrary to popular belief, statistics cannot be made to say anything you want them to.  People just say what they want to say and use others’ ignorance of statistics and logic to make it sound like they’re supported by stats.Most of the time there simply aren’t good statistics on a specific subject unless someone has spent considerable time, effort and money to produce such.  And sometimes even then the stats are inconclusive on many points that we’d like to answer.

    Velazquez’s remarks shouldn’t be a surprise (she’s a politician) but our industry should take seriously the challenge of prioritizing the list of statistics we need for the present and future.  If we don’t, we have only ourselves to blame for having little substantive response to ridiculous smears such as this one.

    • John,
      Hitler is famous for the following statements:  “Make the lie big, make it simple, keep saying it, and eventually they will believe it”  “How fortunate for leaders that men do not think.”  “It is always more difficult to fight against faith than against knowledge.”
      We are a dinky industry.  How many full-time employees does it take to endorse 75,000 (or for that matter 200,000) HECMs in a single fiscal year?  Many of the individuals in our industry perform administrative, clerical, and operational functions.  They are not those who primarily speak out for the industry.
      I know mathematicians and economics believe that correct stats will defeat incorrect information but Adolf, Mao, Karl, Vladimir, Nikita, Joseph, Fidel, Ho, Osama, Nero, and many others throughout history have clearly proven that wrong if not for decades, at least for many years.
      While you are right about the need for a repository of stats, it is even more important for us to gain inroads into the financial opinion making community now.  If we had their support, much of this nonsense would die in the speech making phase.  It is because we do not have their support that it is so easy for our detractors to make statements without fear of consequence.

  • Since reverse mortgages are non-recourse, where is the link between the rise in HECM endorsements and bankruptcies?  It seems the old saying is still true:  “Figures lie and liars figure.” 
    Why does this disease of attacking reverse mortgages in this way come exclusively from a small but very vocal group of politicians within the Democratic Party?  (No, Marty, Senator McCaskill is still a Democrat).  Then there was the head of the Florida state Democratic Party back in 2008, Karen Thurman, who lashed out, saying:  “John McCain should be ashamed of himself for preying on seniors like a bogus reverse-mortgage peddler.”  The story was reported by RMD in a September 19th, 2008 article.
    It seems some Democrats have never forgiven the Ronald Reagan Administration from coming up with a substantially self funded social program signed into law by President George HW Bush.  It seems some Democrats are bent on destroying the HECM program in any way they can. 

    Yes, as Peter Bell points out Senator Coburn and some of the more social conservative Republicans in Congress are clearly against government insurance in any form but they rarely if ever attack HECMs in this manner.  They have a very honest position that most of us do not agree with.  They are not knowingly lying about HECMs; they simply believe that FHA at its roots is unconstitutional.  However, the vast majority of Republicans believe that FHA is a responsible response to helping segments of society obtain the American dream and strongly support the HECM program. 
    Thank goodness, we have an overwhelming support for the HECM program within the Democratic Party.  It is a shame that a small group of Democrats is so strongly opposed to the program that they resort to the old saying quoted above.  Maybe some are misled but not all.

  • I don’t believe Rep Malony’s support for the ammendment has anything to do with comments made by Rep. Velazquez. I don’t see a problem with agency oversight into deceptive lending practices. Obviously Rep. Valazquez didn’t take the economy into account during her statement. I don’t have the data, but one might argue that the bankruptcy rate for seniors would be higher had reverse mortgages not been available.

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