With the goal to cover for the lack of information from actual reverse mortgage clients, the National Reverse Mortgage Lenders Association (NRMLA) contracted ORC International to conduct a research and collect information from reverse mortgage borrowers.
In its response to Consumer Financial Protection Bureau's (CFPB) Notice and Request for Information (Docket No. CFPB-2012-0026), the NRMLA detailed results of ORC International's research.
According to results, all borrowers went through counseling at some point with 63% of them saying they consulted reverse mortgage counselors, 33% said they consulted family members, 29% with knowledgeable friends and 25% said they sought the advice of a financial planner and advisor. Of those who indicated that they talked with reverse mortgage counselors, 64% were done via telephone while 56% reported they had a face-to-face meeting.
The ORC International conducted 501 interviews via telephone with nonpaid, non-due payable borrowers with each interview lasted for about 14 minutes.
ORC International also found that 47% of the respondents indicated that they first heard reverse mortgages from a television commercial or news report while 28% indicated that they heard about reverse mortgage products from a family member, friend, accountant, attorney or financial planner.
When respondents were asked how they would rate their overall reverse mortgage experience, 79% said it was positive while around 9% claimed to have a negative experience. Critical information like this did not make it to the key findings of CFPB report.
According to NRMLA, data showed that an overwhelming majority of seniors are increasingly seeking advice from knowledgeable parties whom they trust before making the decision to avail reverse mortgage. A stark difference from CFPB's findings stating borrowers do not take counseling session seriously.
While the CFPB tried to compensate for the lack of consumer representation in their report, there is some reservation whether the bureau can carry out an objective and non-speculative research. The nonappearance of key findings based on interviews with reverse mortgage borrowers cast doubts on the accuracy of the report they released in June.
The NRMLA further concluded that the majority of borrowers rarely put funds from reverse mortgage at risk.
The 231-page reverse mortgage report released in June pointed out that reverse mortgages for seniors are too complex to understand and a growing number of the borrowers are taking fixed-rate, lump-sum loans putting them at a greater risk of becoming delinquent on taxes and/or insurance that could lead to foreclosure.
With the interview results, NRMLA is hopeful that an accurate picture about the industry will be established. While the CFPB Report provides useful information, its key findings are but unsubstantiated opinion, devoid of factual evidence and data.
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