The Department of Housing and Urban Development is soliciting public comments on a proposal to conduct a reverse mortgage study to determine the extent in which consumer protection issues exist and to define additional appropriate consumer protections if necessary.
Called for in the Housing and Economic Recovery Act of 2008 (HERA), the Secretary of HUD is required to conduct a study to examine and determine “appropriate consumer protections and underwriting standards” for the HECM program to ensure the purchase of additional financial products is appropriate for the consumer.
“These seniors may be particularly vulnerable to predatory lending and there has been media attention of late to attest to instances of abuse,” says documentation for the proposal obtained by RMD. “This survey will help clarify the magnitude and types of abuse from the consumer’s perspective.”
Consisting of information provided by 600 reverse mortgage borrowers sampled from October 2004 to September 2009, the results will provide a statistically valid estimate of the rate which HECM borrowers purchased or were offered to purchase additional financial products with HECM proceeds.
Additionally, the study will allow HUD to analyze the extent of HECM borrower satisfaction with marketing, counseling, origination and servicing efforts, as well as the product overall. The survey will also attempt to asses the impact of recent legislative and policy changes, including the ban on cross-selling and the implementation of more stringent standards for HECM housing counselors. ”These results will help policymakers and program managers structure more “senior-safe” programs” says HUD.
If the agency receives approval from the Office of Management and Budget, the survey would be administered during the months of July and August of 2010.
Study results will be reported to Congress and will be publicly available according to a spokesperson from HUD.
