CFPB Reform Bill Introduces Commissioner Who Will Oversee Reverse Mortgages

What the leadership of the Consumer FInancial Protection Bureau will look like isn’t clear, but a bill that is slowly making its way through the House of Representatives shows how quickly things could change for the reverse mortgage industry.

Introduced by Rep. Spencer Bachus (R-Ala.), H.R. 1121, a bill that would reform the CFPB and would establish a five-member commission to govern the agency, passed the Committee on Financial Services last week. Included in the bill is an amendment from Rep. Nydia Velazquez (D-N.Y.) that assigns one commissioner to oversee the bureau’s activities in protecting consumers who are older or are veterans from abusive, unfair and deceptive lending practices.

“The CFPB faces many challenges dealing with the aftermath of the financial collapse that eroded $14 trillion in wealth and saw 7.5 million jobs lost,” said Velazquez during a House Financial Services markup last week. “Strong leadership will be required to address the many aspects of the economy that continue to be plagued by predatory and abusive lending practices.”

To demonstrate the need for such a position, Rep. Velazquez said lenders have been targeting the equity in seniors’ homes with reverse mortgages.

“Over the last decade the number of reverse mortgages has increased more than 1,300%. Unfortunately, this prolific increase of reverse mortgages has resulted in 61% more bankruptcies by Americans over 55.”

A report from the American Bankruptcy Institute cites the 61% figure as the percentage increase of filers ages 55 and over from 2002 to 2007, but fails to mention anything about reverse mortgages. RMD contacted Rep. Velazquez’s office seeking clarification of her statements, but several attempts for comment made by email and phone were not returned as of press time.

Rep. Carolyn B. Maloney (D-N.Y.) voiced her strong support of the amendment, which she said would bring leadership and accountability to the bureau’s new offices for servicemember affairs and financial protection for older Americans.

“To have this additional protection and focus is legitimate and appropriate, and it will only serve to ensure that the CFPB carries out its consumer protection mission with older Americans and with our men and women in the military,” she said.

The amendment added to the bill that passed by a 33 to 24 vote late last week.

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