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Fend for Themselves: The Industry Leader Update from Reverse Focus on Vimeo.

CFPB Report Exposes Substantial Frustrations Between HECM Borrowers and Some Loan Servicers

reverse mortgage newsIn the last year I have personally spoke with several reverse mortgage originators who are perplexed and frustrated with their past borrower’s experiences in dealing with some reverse mortgage servicers. Let me first say we are fortunate to have some excellent servicers in our space, but there are some major flaws with some as evidenced by a recent statement from the Consumer Financial Protection Bureau and in their recent report.

Personally I had a past borrower call me very upset after the servicer told him the reason his principal limit (or line of credit) decreased in a given month because it was linked to his most recent home value. With that in mind it is not surprising the Bureau states that some HECM servicers are contributing to ‘rampant’ consumer confusion about the loan. Stacy Canna, deputy director of the CFPB Office for Older Americans said at the American Society on Aging’s annual conference, “We heard from many consumers how complained about lack of response. They wrote letters, they called, they asked for callbacks and received either delayed responses or no responses.”

For some perspective, of the 1,200 HECM specific complaints received, 32 % or a total of 384 were servicer-related complaints between December 2011 though December 2014. In reviewing the report it would appear that…

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4 Comments

  1. I am not only frustrated but embarrassed by the servicing of the reverse mortgages that I have originated.
    I tell all of my borrowers and their families to call me first before calling the servicer so I can try to somehow act as a buffer.
    The servicing of these loans has become a ticking time bomb.
    Industry organizations seem to pay no attention to this problem because they are funded mainly by the ‘big boys’ who are ultimately responsible for this poor service.
    If we are not able to police ourselves as an industry rest assure, we will not like the government’s solution to this problem!!!

  2. Interesting, unfortunately. BTW, was the servicer who told the borrower that his LOC was being reduced because of a property value adjustment properly rebuked?

    • Jonathan, yes they were rebuked by me personally. I told them they had a serious training/knowledge problem on their staff.

  3. These complaints are but the tip of the iceberg. Many of these complaints are unnecessary and should have never occurred.

    As others have said, the condition of servicing directly reflects on the product itself. Could that have a significant role in why endorsements are so low? It is interesting that major study has been conducted into endorsements are so low.


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