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The Media Overstates CFPB’s Reverse Mortgage Complaint Report
The media is inaccurate, misleading and selective in reporting the facts? What’s new. The Consumer Financial Protection Bureau’s recent release of it’s report on reverse mortgage complaints was seized upon by both the media and so-called consumer advocate groups. Surprised? No. Damaging? Possibly.
First of all some of the complaints are quite frankly absurd. Take for example the complaint that lenders were unwilling to lower the interest rate making them feel they were being overcharged? Seriously? Even traditional mortgage lenders are unwilling outside of a modification to make such concessions.
Back to our wonderfully accurate media. AARP published an article entitled “Surprise! Reverse Mortgages Are Very Confusing”. The media overall didn’t do much better failing to mention that reverse mortgage complaints only comprised roughly 1% of all mortgage complaints. Hey, don’t let facts get in the way…
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7 Comments
We will never change the media’s approach to reverse mortgages but what we can change is our efforts to proactively present factual and positive news and information about them. First we must insist that our trade association be responsible for this type of campaign and that they spend less time and resources on all of these vacationland conferences and mutual admiration society conclaves. Just pure nonsense that accomplishes nothing to improve our effectiveness as educators and advisors. We need a single “Point Person” for all things media related and we need that person to get on every tv financial and political talk show and radio program on a routine basis as well as to request interview opportunities with all the copy media. We need a designated “Media Relations” person.
Additionally we should insist upon a change of leadership at NRMLA that is more results oriented and less process oriented.
hecmvet,
Why are we so focused on the treatment of the press? That seems more distraction than something which needs a great deal of concern.
If you look at the ebb and flow of bad press, we were growing in the years we had the worst press. Today with better press our endorsement volume is shrinking.
So while I agree with your assessment that we need to get our story out, I do not agree that we should do much about bad press except in the extreme or when presented by media magnates.
RMAdvisor………there is little to disagree in my comments if you take the time to re-read them. I no longer recommend REBUTTING the misinformed and mis-quided blather that leaks out of the news media but rather to frame and focus our story and the facts of RM’s in the appropriate light without any further weak and feckless attempts to counter the bs that occasionally leak out of NORMLA. We simply need to speak early and often about what this product and our mission really is and dismiss the unsupported, groundless and immaterial assertions of the news media and CFPB and AARP, and anyone else who chooses to divide rather than unite all of us for a common purpose, to provide, to the extent possible for the evolving financial needs of a large portion of America’s aging population by supporting, refining and simplifying this crucial and essential social tool to protect and strengthen the self sufficiency of our aging population……If we don’t, medicaid and medicare will implode under the weight of their social burden.
hecmvet,
While I do not advocate ignoring bad press, I do not believe we should be focused on the press except in limited situations. You are after refuting and banging on the CFPB, AARP, and news media. I do not see reverse mortgages saving Medicaid or Medicare.
Nor does my view of reverse mortgages extend to describing HECMs as some kind of social tool. It is simply a non-recourse mortgage with some great and unusual benefits for borrowers.
So to say we have radically different views of what HECMs are and what they can be is to be on point.
HUD has nothing to use the media to put out the truth about the program. Zero. And their latest misstep is putting together a financial assessment aspect that will 1) be difficult to explain to the average consumer 2) dissuade prospective applicants with a tarnished credit history from doing a reverse mortgage because of the low amount of cash available. HUD is turning it’s back on the seniors that the program was designed to help.
Steve,
You declare that the program was designed to help a specific segment of seniors. Can you point out where that is stated in the law or by HUD?
Just because we could target needs based seniors in the past does not mean the program was designed specifically to help them. It was designed to help as many seniors as possible; however, that generosity had to be cut back when it became so apparent that despite MIP, the MMI Fund is projected to have billions in losses. The report for last fiscal year showed the expected loss on all active HECMs at that time increased by about $6.9 billion alone. HUD cannot continue absorbing those large losses so changes had to be made.
Facts are stubborn things. So is 1% of all complaints a good percentage, an expected percentage, or a bad one? The answer lies in just what percentage active HECMs and proprietary reverse mortgages are of total active mortgages.
There are about 620,000 active HECMs today and maybe about 3,000 or so active proprietary reverse mortgages. So if all active residential home mortgages exceed 62,300,000 in total, then the percentage is bad meaning we have more complaints than our portion of the entire mortgage industry but if the total of all active mortgages is smaller, then we are doing better than expected.
Yet with only about 599 complaints for active reverse mortgages versus 59,900 complaints about all active mortgages, the percentage of complaints to active reverse mortgages is less than 0.1% and many of those are irrational. Plus and perhaps even worse the CFPB does not provide the disposition of those complaints. So is less than 600 complaints really surprising or not to be expected? In fact it is surprising that the percentage of complaints is not closer to 1% or more.
But we need to look at the issue of what type of reverse mortgages were lumped together into one category and who was the maker. For example, were single purpose government reverse mortgages included with all reverse mortgages or were family provided reverse mortgages included? There was so little information other than a summarized listing of complaints by general type of mortgage so as to render the list all but useless and generally misleading.