American seniors continue to deal with financial “pain points” in the marketplace as exemplified by the volume and types of complaints which are submitted to the Consumer Financial Protection Bureau (CFPB)’s Complaint Database, with the largest share of complaints among seniors being centered on credit reporting agencies that can affect the personal consumer reports used in banking, insurance, employment or other major commercial services. The reverse mortgage industry is present in the data as well, though with far less of a negative impact on American seniors’ financial stability.
This is according to a new report analyzing CFPB Consumer Complaint data by AARP.
While the credit reporting share of complaints encompasses as much as one quarter of all complaints submitted by seniors to the CFPB, other segments have grown since the affected period between 2018 and 2021, according to AARP.
“Credit or prepaid card complaints have grown as a share of older adult complaints in recent years, forming the second largest category for 2020 (at 23%) and the third largest category in the first six months of 2021 (19%),” AARP’s report says. “Older adults’ complaints about debt collection have declined somewhat in recent years as a relative share of all complaints, from 17% in 2018 to 12% in 2020 and early 2021. Complaints about banking products such as checking or savings accounts have ranged from 9% to 13% between 2018 and early 2021, placing them in fifth place for the first three years and narrowly overtaking debt collection for fourth place in the first half of 2021.”
Smaller shares of the complaint totals center on areas including money transfer, title and payday loans, student loans and vehicle loans, according to the data.
While not making it into the full body of the published report, an extensive footnote demonstrates that AARP aimed to quantify the impact of the reverse mortgage industry on the financial stability of seniors, and what has driven some of their complaint submissions to the CFPB.
“[A]mong older adult consumers who reported in 2020 that they were struggling to pay their mortgages, 6.5% had a home equity loan or line of credit, and 3.5% had a reverse mortgage,” AARP describes. “Among older adult consumers who reported in 2020 having trouble with the payment process on their mortgage, 6.5% had a home equity loan or line of credit, and 4.4% had a reverse mortgage.”
In both the cases of home equity loan/HELOC and reverse mortgages, this encompassed a smaller share of older adult complaints in these categories than either 2018 or 2019, the data said. Among complinants who elected not to self-identify as seniors, approximately 5% of 2020 mortgage complaints in these two areas pertained to home equity loans/HELOCs while less than 1% pertained to a reverse mortgage, the report details.
“This is not surprising given that federally guaranteed reverse mortgages (known as Home Equity Conversion Mortgages, or HECMs) are available only to homeowners age 62 or older,” the note reads.
Read the report at AARP.