Reverse Mortgage Lenders to CFPB: Borrowers Know What They’re Doing

Contrary to initial findings by the Consumer Financial Protection Bureau in a recent in-depth report on reverse mortgages, a new study finds: Consumers are informed in their reverse mortgage decision-making.

By way of informing comments submitted by the National Reverse Mortgage Lenders Association to the CFPB in response to the bureau’s request for comments regarding reverse mortgage use, NRMLA commissioned a survey of more than 500 reverse mortgage borrowers to get firsthand perspective through the eyes of consumers.

Through a third-party consumer research and polling company, ORC International, borrowers were interviewed over the phone.


A departure from the CFPB’s conclusion that reverse mortgage borrowers were confused by the loans or did not have adequate information before taking them, ORC’s discussions with borrowers found that by and large, consumers were very well informed before making the decision.

In fact, 87% of the 501 people interviewed reported having consulted in advance with someone they considered to be knowledgable—including reverse mortgage counselors, family members, friends, financial planners, attorneys, accountants, and loan officers.

Twenty-five percent reported having talked with a financial planner or advisor in advance of moving forward with the loan process and 21% spoke with an attorney, accountant or another trusted advisor.

“All in all, it appears from our data collection that consumers are increasingly seeking advice from knowledgeable parties whom they trust, shopping more vigorously, making more informed decisions on lender and product selection, consulting more often with counselors and reviewing documents before closing, often with multiple parties—all positive trends,” NRMLA writes in the comments.

In addition to detailing the research process consumers take before getting a reverse mortgage, NRMLA looked into the ways borrowers were using their reverse mortgage proceeds and whether their decisions were financially prudent. The findings show borrowers are most often conservative with their loan uses.

“It is apparent to us, based on the survey results, as well as anecdotal evidence from our members who often have ongoing contact with their clients, that, by and large, HECM borrowers utilize their funds judiciously and purposefully, and are fairly conservative with where they “park” any unused funds,” the comments state. “On the one hand, they might experience a “negative arbitrage” on funds they are holding. On the other hand, they are rarely putting those funds at risk.”

Written by Elizabeth Ecker

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  • They (whoever THEY are) are looking for a boogie man here and they won’t find one.  What they will find is a whole lot of disappointed seniors if they keep messing with this stuff.  I have more and more folks rolling their eyes at all the disclosures and duplication of actions before during and after the loan process.  I counted no fewer than 3 documents verifying they understood tax and or homeowners insurance was due, there were 4 documents they had to sign verifying occupancy and 3 pertaining to annuities or using the money to purchase insurance.  Borrowers sign one set at application and another set at time of closing, it really is overwhelming for some.  These folks ask me if our policy makers actually trust our seniors or is this a clever way to dissuade them from utilizing a resource our Federal government endorses?

  • EricSD,

    It is not as sarcastic as you paint it to be.  First who commissioned and paid for the study?  What risk is the third party running if their tone is too optimistic?  Who polices them and are any licenses at risk for bad behavior?

    Is there any more to this study than interpreting spoken responses?  Was there any verification?  Were the questions written to engender the response desired by the customer?

    What controls were in place and what reasonable level of confidence can one have in the findings?  What was the experience level of those documenting the responses?  Was the entire reverse mortgage borrower base available to the surveying entity?  Was the company restricted by the Do Not Call list?  Was ANYTHING verified or was the survey based solely on spoken responses and the interpretation of those responses by the surveyors?  Was the population from whom responses were taken reasonably representative of the larger population of borrowers with active HECMs, as to age, way title is held, gender, marital status, loans where is a non-borrowing spouse, and on and on. 

    It really is not that hard for a trained statistician, which I am not, to poke a lot of holes into any survey which is based solely on spoken responses, particularly where there are any restrictions on the population which can be included in the sample population being surveyed.

    However, this is not to take anything away from the survey or its results.  If the CFPB will not do its job, then someone has to do it.  NRMLA has come through once again.

    • The_Critic,

      Well it was meant to be sarcastic, but your points are well taken. The other point is that most of these same items can be asked of of the CFPB’s report can it not? I mean, at leat this report actually talked to real live borrowers! How in the world can a report be taken seriously and as factual when it did not talk to anyone who actually was on the receiving end of a Reverse Mortgage?

      • EricSD,

        The CFPB report is fine in that regard since it admits this weakness.

        What is absolutely wrong is that the CFPB was so derelict in not performing the survey before they produced the report.  What is worse is that the survey still has not been performed by the CFPB.  

        Take the industry out of the equation and then many of the questions about the survey evaporate or at least are minimized.

  • Well, what does this say about the CFPB? Are borrowers knowledgeable, are they confused, is the CFPB confused, are they trying to confuse us, all good questions, don’t you think?

    I do know this, I talk to many seniors daily and sure, many have a lot of questions, some are confused but most understand the programs plus’s and minus’s after they do their research and after working with a good loan officer that takes the time with them to explain the facts about reverse mortgages.

    I feel our industry is being plain old picked on and singled out, maybe to justify the existence of some certain committees or bureau’s, what do you think?

    I do believe we need to start taking a strong stance on these strong arm committees like the CFPB. We need NRMLA to do more of what they did here. By golly, we have a great product, for the most part, most of us do a good job and our seniors are not out to pasture. Many are very active, are executives in the work place and sure have more common sense than a lot of people in government these days.

    In short, I say we need to give the senior a lot more credit than what bureau’s like the CFPB gives them. They are for the most part, very capable of making their own decisions and know what to do with their money from a reverse mortgage!!!

    John A. Smaldone

    • John,

      Like a bell shaped curve, groups like the CFPB are more concerned about the the few than the many.  To protect the few sometimes requires less freedom for the many.  Or at least that is how THEY justify their positions shrinking the choices of HECM borrowers.  

      Skip Humphrey oversees the area and he ain’t no spring chicken.  In fact he is probably older than a significant percentage of the youngest borrowers.  It is much easier to discuss things with him than younger CFPB leaders like Director Cordray.

      The industry must take advantage of this situation for as long as Skip stays on at the CFPB.

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