The CFPB has released a report on reverse mortgages, as mandated by the Dodd-Frank Act. According to the report, the market for reverse mortgages is very small with only about 2% – 3% of eligible homeowners currently holding a reverse mortgage, and only about 70,000 new reverse mortgages originated each year. However, the report indicates reverse mortgages have the potential to become much more common in the coming decades as baby boomers become eligible.
The CFPB’s report describes the reverse mortgage product, discusses the market volume, dynamics, and the secondary and primary market relationship. The report also discusses the regulatory structure overseeing reverse mortgages and assesses concerns related to consumer protection. The CFPB also studied consumer motivations for using reverse mortgages, as well as the changing consumer demographics.
The Dodd-Frank Act authorizes the CFPB to issue regulations it determines, as a result of the report, are necessary or appropriate. The CFPB has stated it expects to undertake projects to improve the disclosure requirements for reverse mortgages, improve consumer education surrounding the products, and will monitor the market for unfair, deceptive, or abusive practices enforcing supervisory actions if necessary.
Read the full report.