The Consumer Financial Protection Bureau (CFPB) nabbed the attention of various media outlets when it issued a report earlier this month highlighting consumers’ top complaints for reverse mortgages. But what got buried in coverage of the report’s findings was that it only reflects a small pool of reverse mortgage borrowers.
But in total, reverse mortgage complaints comprised about 1% of all mortgage complaints, regardless of age, submitted to the CFPB. Frustrations with loan terms, servicer turnarounds and foreclosure problems topped the list of complaints, according to the report titled Snapshot of Reverse Mortgage Complaints December 2011-2014.
The way media covers the reverse mortgage industry can be misleading, reverse mortgage industry members say.
“The reverse mortgage industry is the topic of daily media wars between the informed and the uninformed,” says Mike Gruley, director of reverse mortgage operations at 1st Financial Reverse Mortgages in the Detroit area. 1st Financial Reverse Mortgages is a division of Success Mortgage Partners.
”There is consistent evidence to show that when consumers and their advocates understand exactly how reverse mortgages actually work, they see the virtue of reverse mortgages as a retirement planning tool for certain circumstances,” Gruley says. “The challenge with the perception of reverse mortgages is less about product attributes and performance, and more about misinformation.”
Overall, the reverse mortgage industry has been responsive to consumers’ concerns, reverse mortgage originators say, noting recent changes to non-borrowing spouse guidelines.
“[Advisors are] educating borrowers, as well as their families, on their responsibilities and about fallouts if those obligations are not met,” says Brian Cook, reverse mortgage specialist with Federal Way, Wash.-based Alpine Mortgage Planning, adding that the public perception of reverse mortgage mortgages has gotten “much, much better” over the years. “As more people are being educated about them, more importantly those advising seniors and retirees, they understand how unique a reverse mortgage is to each borrower and the opportunities the loan can provide.”
Reverse mortgage advisors are also diligent about keeping up with the ongoing changes to the reverse mortgage product, Gruley says, noting that some of the same consumer frustrations logged against the reverse mortgage sector are likely seen in more mature and widely accepted industries, such as the investment and computer industries.
“The reverse mortgage industry has been and still is heavily challenged trying to keep up with the often enormous changes, while still continuing to inform consumers about those changes,” he says. “It is sometimes like hitting a moving target, but compared to many more mature industries, I think the industry has done a good job.”
As reverse mortgages continue to evolve to best suit consumers’ and the industry’s needs, the sector will rise to the challenge, experts agree.
“There will always be more work to be done, and the reverse mortgage industry always accepts that challenge,” Gruley says.
Written by Cassandra Dowell