CFPB Releases Report on Reverse Mortgage Advertising
As part of the CFPB’s ongoing efforts to monitor the reverse mortgage industry, the CFPB recently published a report on its assessment of certain reverse mortgage advertising. Specifically, the report analyzed reverse mortgage direct mail advertising from 2016 through 2022.
In the report, among other things, the CFPB made the following observations with respect to its analysis of reverse mortgage direct mail advertising:
- The volume of reverse mortgage direct mail advertising significantly increased in 2021 and 2022 compared to the prior five years.
- Roughly three-quarters of reverse mortgage direct mail advertising went to consumers with low and moderate incomes (household income below 75%) in 2021-2022.
- In 2021 and 2022, over four-fifths of the reverse mortgage direct mail advertising volume went to consumers living in states in the South and West– where reverse mortgage lending is concentrated, and where more older homeowners reportedly struggle to make ends meet and make their mortgage payments.
- A larger percentage of reverse mortgage direct mail advertisements in 2021 and 2022 mentioned refinancing than in previous years, and they generally encouraged homeowners with existing reverse mortgage loans to refinance into new reverse mortgages.
Based on its recent findings, the CFPB concluded that reverse mortgage lenders are “potentially targeting vulnerable populations with an expensive product that may not be best suited for their individual housing and financial needs.” Additionally, the CFPB stated that the report’s findings will inform the “[Bureau’s] ongoing monitoring of the reverse mortgage marketplace, where [the CFPB] identify risks to older adults and take steps to ensure they are protected from potentially unlawful practices.”
