Complaints related to the Home Equity Conversion Mortgage program accounted for about 5% of all mortgage-related complaints from older Americans, according to a new analysis of Consumer Financial Protection Bureau data.
Issues with mortgages took up the largest share of reported complaints by citizens older than 62, representing 31% of more than 72,000 recorded incidents; of those, 5% consisted of reverse mortgage problems, the U.S. PIRG Education Fund found.
The Washington, D.C.-based organization — which represents state-level public interest research groups (PIRGs) — found complaints from reverse mortgage holders who were unable to access their lines of credit or had issues maintaining mandatory tax-and-insurance payments.
“The risks of such products are not fully understood by consumers, and the Consumer [Financial Protection] Bureau has taken action against reverse mortgage companies for misleading consumers about risks,” the U.S. PIRG wrote in its report.
These statistics differ slightly from the CFPB’s regular release of monthly data, which most recently found that 1.5% of mortgage complaints related to reverse mortgages; however, the bureau used the total number of submissions received between January and March 2017, while the U.S. PIRG used all available complaints submitted by users over the age of 62. Only 54% of respondents indicated their ages, according to both the CFPB and U.S. PIRG.
“Compared to general mortgage complaints submitted by older consumers, reverse mortgage complaints are slightly more likely to be focused on problems early in the mortgage process,” the organization noted, pointing out that a quarter of HECM complaints revolved around applying for a new mortgage or a refinance, or the mortgage-closing process.
Still, the vast majority of remaining issues stemmed from payment issues, U.S. PIRG found.
The organization supports the continued existence of the CFPB in its current form, criticizing the Financial Choice Act in its release announcing the statistics; that piece of legislation, passed by the House in June, would substantially roll back the CFPB’s authority and oversight power.
“Gutting the CFPB makes it easier for financial scammers to move against older consumers, threatening their homes and retirement savings,” U.S. PIRG consumer program director Ed Mierzwinski said in a statement.
Written by Alex Spanko