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CFPB Complaints from Older Consumers Decline Despite Overall Spikes

The number of complaints filed with the Consumer Financial Protection Bureau increased by 19% from the first quarter of 2016 to the same span this year, but older consumers reported fewer issues over that period.

The CFPB received an average of 2,181 complaints from consumers aged 62 and older each month from January to March 2017, a decline of 33 issues per month — or just about 1 percent — from the first quarter of 2016, according to the bureau’s most recent Monthly Complaint Report.

Reverse mortgage-related complaints accounted for about 1.5% of all mortgage issues reported to the bureau so far in 2017, a figure that has been steadily creeping upwards since the CFPB began collecting consumer feedback in 2011: Back then, Home Equity Conversion Mortgage issues represented just around 0.5% of the total.

As RMD reported last month, total complaints to the CFPB have risen significantly throughout its existence, but experts — including Ballard Spahr partner Reid Herlihy, who spoke with RMD at the time — generally chalk up the spike to growing consumer awareness of the bureau’s role in handling financial-related problems. Still, mortgage-related complaints have long accounted for a major chunk of the CFPB’s total, and real-estate blog Trulia last month observed that borrowers aged 62 and older represent a disproportionately large chunk of overall respondents.

The CFPB provided a list of common reverse mortgage complaints, which should be familiar those who work in the HECM space. Since the bureau kicked off its complaint program in 2011, 39% have been related to “problems when you are unable to pay,” with a further 33% concerning regular payments and 16% over loan applications.

While acknowledging that HECM borrowers must pay their mandatory obligations and that servicers can arrange payment plans for distressed homeowners, the CFPB report notes that “some consumers also stated they were removed from the repayment agreement without notification, or the notification they received did not provide adequate explanation.”

The CFPB also called out issues surrounding the transition after the death of a borrower, both from non-borrowing spouses and successors in interest. 

“Servicers were slow to acknowledge their requests and occasionally required the same documentation to be submitted multiple times,” the report notes of some non-borrowing spouses. “Sometimes these delays resulted in foreclosures being initiated.”

“Successors in interest stated they were not given an opportunity to purchase the property or to market and sell the property after providing documentation of proof to act on behalf of the borrower’s estate,” the report continues. “Successors in interest also reported difficulties communicating with servicers, and experienced delays in navigating the process, which sometimes resulted in the initiation of foreclosure proceedings.”

Meanwhile, up on Capitol Hill and in the federal courts, the CFPB’s very existence remains under threat. The U.S. Court of Appeals for the D.C. Circuit will issue a ruling on the constitutionality of the CFPB’s leadership structure “toward the end of the year” after hearing oral arguments on May 24, Ballard Spahr’s Consumer Finance Monitor blog reported late last week, while the Republican-crafted Financial CHOICE Act could see debate and a vote in the full House of Representatives in the next few weeks. Among other provisions aimed at rolling back the Dodd-Frank financial reforms, the act would restructure the CFPB and weaken its authority.

As RMD noted last week, President Trump’s proposed budget plan would also effectively kill the CFPB by substantially reducing its funding. That budget, however, represents more of a wish list than an actual blueprint, with even members of Trump’s GOP declaring the document “dead on arrival.”

Written by Alex Spanko