The industry has long argued and lamented over the media and Washington D.C. failing to recognize how important reverse mortgages are to so many seniors, and it it is disheartening to see how an opportunity to change that could be wasted.
Earlier this year, the Consumer Financial Protection Bureau (CFPB) came out with a report in which it found that consumers were confused about reverse mortgages.
Despite not talking with a single consumer who has a reverse mortgage, the agency is requesting information from the public about a range of topics: the factors that influence reverse mortgage consumers’ decision making, the use of their proceeds, and many more.
Using the feedback, the agency says it will implement regulations on the product and industry, likely having a significant impact on the business going forward. Sounds like a pretty important time for the industry to rally and get involved, right? Apparently not.
Only one reverse mortgage lender—All Reverse Mortgage Company—has successfully worked with their clients to submit any feedback to what one could argue is the most powerful agency to protect consumers….
According to Regulations.gov, there have been 30 comments submitted to the agency regarding its initial request for information. I went through each comment it didn’t take too long considering there were only 30 and found about 30% are positive. Many are random musings from consumers and the rest are typically from the children of parents who have taken out a reverse mortgage and are upset they won’t receive the home free and clear anymore.
All of this is pretty frustrating considering how much RMD hears about how the media and the public doesn’t understand all the good the product does to help improve seniors’ lives. Well, here is a perfect opportunity for all of those people to assist borrowers and make sure that other seniors will have access to the product in the future.
The National Reverse Mortgage Lenders Association has sent out numerous emails to members saying how important it is for lenders to work with consumers to submit their feedback to the CFPB, but lenders have done very little about it so far. NRMLA has even given detailed instructions about how to do it, but lenders are failing to act.
I’ll be the first to admit that it’s not the easiest way for borrowers to submit feedback, but get creative. All RMC has recorded phone conversations and scanned hand written letters to submit to the agency to make sure they realize how important of a product the Home Equity Conversion Mortgage (HECM) is to seniors.
For all those who are saying they don’t have the staff to do such things, take All RMC’s case for example: While they’re a growing lender, they have seven full time employees and have submitted one third of the comments received by the CFPB, an agency that like it or not, holds the fate of the industry in its hands.
The good news is: there is still a bit of time for lenders to take action. Comments must be received on or before August 31, 2012 in order to be considered. The time for action is now.
If each of the top 100 reverse mortgage lenders successfully encouraged just one borrower to submit his or her feedback, there would be almost four times the number of comments that are there today.
Without the industry’s help, it is highly unlikely the CFPB will have an accurate picture of how important reverse mortgages are to consumers. If something happens to the product that people don’t agree with, anyone who hasn’t worked with their borrowers to submit experiences to the CFPB doesn’t have a right to complain.
The industry has 11 days to submit comments. It’s time to get started.
Update: Kenneth J. Klawans of iReverse told me he has submitted 50 comments from customers and none have been approved. Is anyone else having the same problem? If so, leave your comments below.
In this commentary, NRMLA President Steve Irwin offers the reverse mortgage industry a look at the issues the association is currently examining.