[Federal Register Volume 77, Number 127 (Monday, July 2, 2012)]
[Notices]
[Pages 39222-39224]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-16078]
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BUREAU OF CONSUMER FINANCIAL PROTECTION
[Docket No. CFPB-2012-0026]
Consumer Use of Reverse Mortgages
AGENCY: Bureau of Consumer Financial Protection.
ACTION: Notice and request for information.
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SUMMARY: Section 1076 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act (the Dodd-Frank Act) required the Bureau of Consumer
Financial Protection (the CFPB or the Bureau) to conduct a study on
reverse mortgage transactions.\1\ The Bureau published this study in a
June 28, 2012 Report to Congress.
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\1\ Dodd-Frank Wall Street Reform and Consumer Protection Act,
Public. Law 111-203, Sec. 1076(a), 124 Stat. 2075 (2010) (12 U.S.C.
5602).
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The Bureau also has authority to implement regulations on reverse
mortgage transactions. Specifically, the Bureau has authority to
implement federal consumer financial laws, including the Truth in
Lending Act and the Real Estate Settlement Procedures Act, which
already impose requirements on reverse mortgage transactions. Further,
section 1076 of the Dodd-Frank Act supplements the Bureau's authority
to specify that the Bureau's regulations of reverse mortgage
transactions may identify any practice as unfair, deceptive, or
abusive, and may provide for an integrated disclosure standard and
model disclosures.\2\
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\2\ Id. Sec. 1076(b).
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To assist its ongoing study of reverse mortgage transactions, the
Bureau is
[[Page 39223]]
seeking detailed information from the public on the factors that
influence reverse mortgage consumers' decision-making, consumers' use
of reverse mortgage loan proceeds, longer-term consumer outcomes of a
decision to obtain a reverse mortgage, and differences in market
dynamics and business practices among the broker, correspondent, and
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retail channels for reverse mortgages.
DATES: Comments must be received on or before August 31, 2012 to be
assured of consideration.
ADDRESSES: You may submit comments, identified by Docket No. CFPB-2012-
0026, by any of the following methods:
Electronic: http://www.regulations.gov. Follow the
instructions for submitting comments.
Mail/Hand delivery/Courier: Monica Jackson, Office of the
Executive Secretary, Bureau of Consumer Financial Protection Bureau,
1700 G Street NW., Washington, DC 20552.
Instructions: The CFPB encourages the early submission of comments.
All submissions must include the document title and docket number.
Because paper mail in the Washington, DC area and at the Bureau is
subject to delay, commenters are encouraged to submit comments
electronically. Please note the number associated with any question to
which you are responding at the top of each response (you are not
required to answer all questions to receive consideration of your
comments). In general, all comments received will be posted without
change to http://www.regulations.gov. In addition, comments will be
available for public inspection and copying at 1700 G Street NW.,
Washington, DC 20552, on official business days between the hours of 10
a.m. and 5 p.m. Eastern Time. You can make an appointment to inspect
the documents by telephoning 202-435-7275.
All comments, including attachments and other supporting materials,
will become part of the public record and subject to public disclosure.
Sensitive personal information such as account numbers or Social
Security numbers should not be included. Comments will not be edited to
remove any identifying or contact information.
FOR FURTHER INFORMATION CONTACT: For general inquiries, submission
process questions or any additional information, please contact Monica
Jackson, Office of the Executive Secretary, at 202-435-7275.
SUPPLEMENTARY INFORMATION:
Background
As part of the Dodd-Frank Wall Street Reform and Consumer
Protection Act, Congress directed the Consumer Financial Protection
Bureau (CFPB) to conduct a study on reverse mortgages.\3\ In designing
the study, the CFPB's objectives were to (1) provide an authoritative
resource on reverse mortgage products, consumers, and markets; (2)
identify and assess consumer protection concerns; and (3) explore
critical unanswered questions and update the public body of knowledge
to reflect new market realities. On June 28, 2012, the CFPB released
the findings of the study in a Report to Congress (the Report).
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\3\ Id. at Sec. 1076(a).
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The study identified four major topics where additional research
would help determine if additional consumer education or regulatory
action is needed. Those topics are: (a) Factors influencing consumer
decisions; (b) consumer use of reverse mortgage proceeds; (c) the
longer-term outcomes of reverse mortgages; and (d) the differences in
market dynamics and business practices among the broker, correspondent,
and retail channels. This request seeks comment and information from
the public on these topics.
Request for Information
The Bureau seeks information from the public, including consumers,
housing counselors, financial institutions, and others, regarding
consumer use of reverse mortgages and consumer experiences during the
reverse mortgage shopping process. This information will enable the
Bureau to better understand and evaluate potential consumer protection
issues raised by reverse mortgages and the shopping process.
The questions are grouped into four broad topics: (a) Factors
influencing consumer decisions, (b) consumer use of reverse mortgage
proceeds, (c) the longer-term outcomes of reverse mortgages, and (d)
the differences in market dynamics and business practices among the
broker, correspondent, and retail channels.
You may respond to all of the questions or only some questions.
Please note the number of any question to which you are responding at
the top of each response. If your responses are specific to a
particular reverse mortgage product option (e.g., fixed-rate, lump-sum
vs. adjustable-rate, line-of-credit products), please note in your
response to which product your response relates.
Please note that the Bureau is not seeking personally identifying
information (PII) in response to this request. Responses to this
request should not contain any reverse mortgage account numbers, Social
Security numbers or other personal information that could be used to
identify an individual consumer or account, nor should they include any
information that may otherwise reveal personally identifiable
information.
Factors influencing consumer decisions:
1. What factors are most important to consumers in deciding whether
to get a reverse mortgage?
2. What factors are most important to consumers in choosing among
products? Among other things, comments could address the choice between
fixed-rate, lump-sum reverse mortgages and adjustable-rate, line-of-
credit or monthly disbursement reverse mortgages.
3. What factors are most important to consumers in choosing among
potential lenders?
Consumer use of reverse mortgage proceeds:
4. Nearly 75% of recent reverse mortgage consumers took out all of
their available funds upfront in a lump sum.
a. What do consumers do with these funds?
b. Where do consumers place loan money that they do not use
immediately? (E.g., in a savings account, an investment account, a
certificate of deposit (CD), etc.).
5. Some reverse mortgage consumers use reverse mortgage loan funds
to refinance a traditional mortgage or home equity loan/line of credit.
a. What proportion of consumers are using reverse mortgage loan
funds to refinance a traditional mortgage or home equity loan/line of
credit?
b. What proportion of the loan funds are typically spent on paying
off an existing mortgage?
c. Do consumers using a reverse mortgage to refinance an existing
mortgage typically consider other options first (e.g. moving to a
different home or a traditional refinancing)? If not, why not? If so,
what factors lead them to choose a reverse mortgage instead?
6. Some reverse mortgage consumers use reverse mortgage loan funds
to consolidate non-housing debts.
a. What proportion of borrowers use reverse mortgage loan funds to
consolidate non-housing debts?
b. What proportion of the loan funds are typically spent on
consolidating non-housing debts?
c. What types of non-housing debts are typically consolidated (e.g.
credit card, auto, medical-related debt, etc.)?
Longer-term outcomes for reverse mortgages borrowers:
[[Page 39224]]
7. Consumers typically pay off their reverse mortgage loans earlier
than would be expected based on underlying mortality rates.
a. Why do consumers typically pay off their reverse mortgage loans
early?
b. Do consumers anticipate being able to pay off a reverse mortgage
at a specific time (e.g. upon receiving a pension or retirement
benefit) when taking the reverse mortgage loan?
c. Do consumers who pay off their loans early typically feel that
the loan was a good choice? Are there things they wish they had done
differently?
8. Some consumers pay off a reverse mortgage upon moving out of a
home.
a. Why do consumers decide to move? Are such moves typically
because the move is planned in advance or because the move is required
for health or other reasons?
b. How do reverse mortgage borrowers finance a later move?
9. What are the typical outcomes for borrowers who still have the
loan after 5 years or more?
a. Does the loan continue to meet borrowers' financial needs 5 or
more years after origination?
b. If borrowers have drawn all of their available funds, what
financial resources do they use to meet new or unexpected expenses?
c. Do borrowers who still have the loan after 5 or more years
typically feel that the loan was a good choice? Are there things they
wish they had done differently?
The differences in market dynamics and business practices among the
broker, correspondent, and retail channels:
10. How are brokers, correspondent lenders, and retail loan
officers typically compensated?
a. How does this compensation differ by channel?
b. How do compensation structures and regulatory requirements
(e.g., mortgage loan originator compensation rules) affect the business
practices of lenders and brokers?
c. How do these factors affect the choices presented to consumers?
11. The Bureau has observed that major large bank originators of
reverse mortgages tended to originate a far higher percentage of
adjustable-rate, line-of-credit (or monthly-installment) loans than the
nonbank originators. What explains this difference?
Dated: June 25, 2012.
Garry Reeder,
Acting Chief of Staff, Bureau of Consumer Financial Protection.
[FR Doc. 2012-16078 Filed 6-29-12; 8:45 am]
BILLING CODE 4810-AM-P