A democratic congressman recently asked the Consumer Financial Protection Bureau (CFPB) its plans for reverse mortgage oversight, especially considering an increasingly aging population, during the House Committee on Financial Services and Subcommittee on Financial Institutions hearing on Nov. 2.
As the battle over the bureau raged on between Democrats and Republicans, Congressman Luis Gutierrez (D-Ill.) referenced reverse mortgages in relation to the Baby Boomer generation, thousands of which are reaching retirement age each day.
“It’s just growing and it’s just going to continue by millions and millions of people,” he said. “Reverse mortgages, are you going to take a look at those?”
Raj Date, special advisor to the Secretary of the Treasury on the CFPB, replied affirmatively.
“We are. It’s one of these products that on its face is actually an ingenious thing,” he said. “The demographics look quite positive. There might be a real productive use for the product and its growth over time.”
He also mentioned the bureau’s previously stated intention to conduct and publish a study on reverse mortgages, stating its role to protect seniors as a “potentially vulnerable population.”
The congressman seemed concerned about what could happen if consumers don’t fully understand the product, but acknowledged its potential use.
“So, we’ll learn because reverse mortgages sound great,” said Gutierrez. “But if you have to pay the taxes and you got to fix the leaky roof and you don’t understand all the conditions, reverse mortgage could literally put you on the street without a stream of income.”
It’s important to look into the product from two different perspectives, Gutierrez continued, as the CFPB has been charged with protecting senior citizens with a special capacity, and also as part of its plans to regulate the overall mortgage industry in a general capacity.
The CFPB “absolutely” plans to look into reverse mortgages, Date confirmed.
“I’m looking forward to those studies and making sure that the public has a broad understanding of those studies so that they can be better protected,” said Gutierrez, who has previously co-signed a letter to the Department of Housing and Urban Development requesting a modification of the reverse mortgage program regarding the policy for non-borrowing spouses.
The bureau is required by the Dodd-Frank Act to conduct a study within the first year of its launch.
Written by Alyssa Gerace