February 2015

Snapshot of reverse 

mortgage complaints 

December 2011 - December 2014

Office for Older Americans
2 CONSUMER FINANCIAL PROTECTION BUREAU 

Table of contents

Table of contents.........................................................................................................2

1. Introduction...........................................................................................................3

2. Background...........................................................................................................5

3. Consumers’ complaints indicate confusion and frustration over 

the terms and requirements of reverse mortgages ...........................................7

3.1 Consumers complain that they cannot refinance ....................................8

3.2 Consumers complain that they are unable to change the terms of their 

loans......................................................................................................... 8

3.3 Surviving spouses lose their home upon death of the borrowing 

spouse .......................................................................................................9

4. Consumers complain about problems with loan servicing ............................11

4.1 Consumers complain that loan servicers make repaying the loan 

difficult.....................................................................................................11

4.2 Consumers complain that they are facing foreclosure due to nonpayment of property taxes or homeowners insurance .......................... 13

4.3 Consumers complain that loan servicers fail to keep accurate records. 13

4.4 Consumers complain that they face obstacles when attempting to 

prevent foreclosure................................................................................. 14

5. Conclusion ..........................................................................................................15
3 CONSUMER FINANCIAL PROTECTION BUREAU 

1. Introduction

Many older consumers and their families are confused and frustrated by the terms and 

conditions of reverse mortgages according to complaints submitted to the Consumer Financial 

Protection Bureau (CFPB). Reverse mortgages are a special type of loan that allows 

homeowners, 62 and older, to borrow against the accrued equity in their homes. 

Reverse mortgages differ from other types of home loans in a few important ways. First, unlike 

traditional “forward” mortgages, reverse mortgages do not require borrower(s) to make monthly 

mortgage payments (though they must continue paying property taxes and homeowners’ 

insurance). Prospective reverse mortgage borrowers are required to undergo mandatory housing 

counseling before they sign for the loan.1 The loan proceeds are generally provided to the 

borrowers as lump-sum payouts, annuity-like monthly payments, or as lines of credit.2 The 

interest and fees on the mortgage are added to the loan balance each month. The total loan 

balance becomes due upon the death of the borrower(s), the sale of the home, or if the 

borrower(s) permanently move from the home. In addition, a payment deferral period may be 

available to some non-borrowing spouses following the borrowing spouse’s death.3

 1 HUD, Reverse Mortgages (HECMS) for Seniors, How the Program Works,

http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/hecm/hecmabou.

2 The line of credit and monthly payment options may be combined. Id.

3 See HUD Mortgagee Letter 2014-07 (April 25, 2014), 

http://portal.hud.gov/hudportal/documents/huddoc?id=14-07ml.pdf (“ML 2014-07”); HUD Mortgagee 

Letter 2015-03 (Jan. 29, 2015), http://portal.hud.gov/hudportal/documents/huddoc?id=15-03ml.pdf 

(ML2015-03); see also, section 3.3 infra. 
4 CONSUMER FINANCIAL PROTECTION BUREAU 

The CFPB began accepting consumer complaints on reverse mortgages in December 2011. This 

Snapshot provides an overview of consumer complaints submitted to the CFPB involving 

reverse mortgages from December 2011 through December 2014.4 From December 1, 2011 

through December 31, 2014, CFPB handled approximately 1,200 reverse mortgage complaints. 

Reverse mortgage complaints comprise about 1 percent of all mortgage complaints, regardless of 

age, submitted to the CFPB. Consumers’ most frequent complaints involve their inability to 

make certain changes to the loans, as well as loan servicing difficulties. 

FIGURE1. REVERSE MORTGAGE COMPLAINTS, BY AGE, SUBMITTED TO THE CFPB FROM DECEMBER 2011 

TO DECEMBER 20145

 4 The analysis is based upon a manual review of a random representative sample consisting of 500 of the 

1200 reverse mortgage complaints submitted to the CFPB. Multiple staff reviewed the complaints to 

ensure consistency in the analysis. 

5 Regardless of the age of the complainant, all reverse mortgages are linked to older consumers due to the 

age requirement of the product. 

 Complaints are submissions that express dissatisfaction with, or communicate suspicion of wrongful 

conduct by an identifiable entity related to a consumer’s personal experience with a financial product or 

service. The CFPB accepts, responds to, and analyzes consumer complaints. 12 U.S.C. § 5493(b)(3). See 

also http://www.consumerfinance.gov/complaint/process/.

12%

46%

42% Under 62

No age reported

62 and older
5 CONSUMER FINANCIAL PROTECTION BUREAU 

2. Background

Most reverse mortgages today are federally insured through the Federal Housing Authority’s 

(FHA) Home Equity Conversion Mortgage (HECM) program.6 Rather than credit and incomebased underwriting used in traditional mortgages, a borrower’s age and the amount of equity in 

the home are the primary factors used to qualify for a HECM. As of March 2, 2015, the 

underwriting for HECMs will consider credit history and financial assessments of prospective 

borrowers, though loan qualification remains primarily equity-driven.7

The reverse mortgage market is approximately one percent of the size of the traditional 

mortgage market.8 The number of reverse mortgage originations, however, is likely to increase 

in upcoming years as the “baby boom” generation, those born from 1946 to 1964, retires.9 There 

are several factors contributing to the likely increase. Among other things, 41 percent of 

 6 In this report, “HECM” and “reverse mortgage” are used interchangeably. The market for proprietary 

(non-HECM) reverse mortgages has been relatively inactive since 2008. The underwriting criteria for 

proprietary reverse mortgages vary by state. CFPB, 2012 CFPB Report To Congress on Reverse 

Mortgages, p.100,

 http://files.consumerfinance.gov/a/assets/documents/201206_cfpb_Reverse_Mortgage_Report.pdf.

7 HUD Mortgagee Letter 2014-22 (Nov. 10, 2014),

http://portal.hud.gov/hudportal/documents/huddoc?id=14-22ml.pdf.

8 As of September 30, 2014, there were 628,000 HECM loans outstanding. FHA presentation to NRMLA 

Annual Meeting, November 11, 2014. Presentation and recordings available with membership at 

http://nrmlaonline.org/events/default.aspx. As of September 30th, 2014, there were 50 million

traditional mortgages outstanding. See Moody’s Analytic data, available with subscription at 

http://www.economy.com, and Experian, Oliver Wyman Market Intelligence Reports, available with 

subscription at http://www.experian.com/decision-analytics/market-intelligence/reports.html. 

9 Nora Caley, Aging In Place, With A Loan: The State Of The Reverse Mortgage Industry, Mortgage Orb, 

Volume 2, Issue 17. (May 8, 2013), available at 

 http://www.mortgageorb.com/e107_plugins/content/content.php?content.13765
6 CONSUMER FINANCIAL PROTECTION BUREAU 

Americans aged 55-64 have no retirement savings account.10 For those in this age group who do 

have a retirement account, the median account balance is only $103,200.11 In addition, an 

increasing number of Americans are retiring without pensions.12 The Employee Benefit 

Research Institute (EBRI) finds that 44 percent of baby boomers will fall short of adequate 

retirement income for basic expenses and uninsured health care costs.13 Women, in particular, 

have an increased likelihood of outliving assets due to, among other things, lower savings and 

lower private pension coverage.14

The homeownership rate for those aged 55-64, however, is 74 percent.15 Homeowners aged 62 

and older hold a combined $3.84 trillion in equity in their homes according to the National 

Reverse Mortgage Lenders Association (NRMLA).16 Accrued home equity, therefore, will likely 

play an increasing role in supplementing retirement income in the future for many older 

homeowners facing a shortfall in income.

The most common ways for consumers to access home equity is by refinancing an original 

mortgage, borrowing a home equity line of credit or loan, obtaining a reverse mortgage, or 

selling the home and downsizing to a less expensive home. 

 10 Fed. Reserve Bd, 2010 Survey of Consumer Finances: Percent of families with retirement accounts, 

p.441, http://www.federalreserve.gov/econresdata/scf/files/BulletinCharts.pdf.

11 Fed. Reserve Bd, 2010 Survey of Consumer Finances: Median value of retirement accounts for families 

with holdings, p.442, http://www.federalreserve.gov/econresdata/scf/files/BulletinCharts.pdf.

12 See EBRI, Fast Facts, #225, Pension Plan Participation (March 28, 2013), 

http://www.ebri.org/pdf/FF.225.DB-DC.28Mar13.pdf.

13 See EBRI, Notes, Vol. 33, No.5 (May 2012), at 

http://www.ebri.org/pdf/notespdf/EBRI_Notes_05_May-12.RSPM-ER.Cvg1.pdf.

14 See WISER & Society of Actuaries, Impact of Retirement Risk on Women, 2013 Risks and Process of 

Retirement Survey Report (2013), available at 

https://www.wiserwomen.org/images/imagefiles/2014-risks-process.pdf.

15 Fed. Reserve Bd, 2010 Survey of Consumer Finances: Percent of families with primary residence, 

p.585, http://www.federalreserve.gov/econresdata/scf/files/BulletinCharts.pdf.

16 NRMLA, Press Release (January 7, 2015), http://nrmlaonline.org/rms/press.aspx?article_id=1553.
7 CONSUMER FINANCIAL PROTECTION BUREAU 

3.Consumers’ complaints 

indicate confusion and 

frustration over the terms and 

requirements of reverse 

mortgages

FIGURE 2. REVERSE MORTGAGE COMPLAINTS, BY ISSUE, SUBMITTED TO THE CFPB DECEMBER 2011 TO 

DECEMBER 201417

 17 Complaint issue categories in Figure 2 comprise the following complaint subcategories: Problems when 

unable to pay (loan modification, collection, foreclosure); Making payments (loan servicing, payments, 

escrow accounts); Applying for the loan (application, originator, mortgage broker); Signing the 

agreement (settlement process and costs); and, Receiving a credit offer (credit decisions, underwriting). 

Percentages may not sum to 100 percent due to rounding.

3%

10%

18%

32%

38%

0% 5% 10% 15% 20% 25% 30% 35% 40%

Receiving a credit offer

Signing the agreement

Applying for the loan

Making payments

Problems when unable to pay
8 CONSUMER FINANCIAL PROTECTION BUREAU 

3.1 Consumers complain that they cannot 

refinance 

Many older consumers and their family members who submit complaints demonstrate 

confusion about the terms and requirements of reverse mortgage loans. For example, many of 

these consumers are frustrated when they are unable to refinance their loans because there is 

insufficient remaining equity in their homes. These complaints suggest that some homeowners 

may not understand that the loan proceeds as well as the accrued interest on the loan overtime 

will substantially decrease the amount of available equity.

3.2 Consumers complain that they are 

unable to change the terms of their 

loans

As of December 2014, one of the most common reverse mortgage complaints concerns denials 

for changing terms of the loan. Some consumers complain that lenders refuse to lower their 

loan’s interest rates and thus they feel they are being overcharged. Other consumers complain 

that the variable interest rate on their reverse mortgage increased too quickly. 

The most frequent complaint concerning requested loan changes, however, involves consumers 

wishing to add additional borrowers to the loan in order to extend the term of the loan. Adult 

children of reverse mortgage borrowers also submit complaints describing frustration that 

lenders refuse to add them to the loan as an additional borrower or allow them to “assume” the 

reverse mortgage loan for an aging or deceased parent. These complaints often stem from 

confusion about loan terms and requirements. Reverse mortgages prohibit loan assumptions 

since actuarial tables are used when a reverse mortgage is issued to determine how much to lend 

to the borrower(s); as a result loan repayment is triggered when the last borrower moves out or 
9 CONSUMER FINANCIAL PROTECTION BUREAU 

dies. Adult children may retain the home only by paying off the loan or by paying 95 percent of 

the value of the home.18

These complaints reflect the difficulties some families encounter when a reverse mortgage 

borrower dies while non-borrowing family members are living in the home at the time of the 

borrower’s death. Some family members in multigenerational households tell the CFPB they did 

not realize until the lender contacted them after their parents’ death that the home would be 

sold.

3.3 Surviving spouses lose their home upon 

death of the borrowing spouse

Reverse mortgage loan amounts are, in part, calculated using a borrower’s age, with older 

homeowners eligible to borrow against a greater percentage of their equity than younger 

borrowers may borrow. 

Some married couples report to the CFPB that they borrowed a reverse mortgage in the name of 

only the older of the two spouses.19 Non-borrowing spouses (NBS) submit complaints distraught 

that they are facing foreclosure and about to lose their home after their husband or wife dies. 

Other non-borrowing spouses submit complaints worried about their ability to remain in their 

home should the older spouse die first. Consumers submit complaints saying that they were 

unaware that the younger non-borrowing spouse could lose the home if the older spouse dies 

first. Some consumers report that their loan originator falsely assured them they would be able 

to add the other spouse to the loan at a later date. 20

 18 24 CFR 206.125 (C)

19 Joint borrowers on a reverse mortgage are not required to be married although joint borrowers are 

often married couples.

20 HUD has taken steps to address false claims associated with these types of complaints. On June 18, 

 2014, HUD released Mortgagee Letter 2014-10 (ML 2014-10), which reminded mortgagees of the 

 Federal Housing Administration’s (FHA) requirements prohibiting misleading or deceptive advertising. 

 ML 2014-10 further clarifies that the prohibition extends to misleading or deceptive descriptions of the 

 HECM program. See ML2014-10 (June 18, 2014), 
10 CONSUMER FINANCIAL PROTECTION BUREAU 

On April 25, 2014, the U.S. Department of Housing and Urban Development (HUD) issued a 

mortgagee letter, effective August 4, 2014, providing, among other things, that non-borrowing 

spouses, meeting certain conditions, may remain in the home after the death of the borrower 

spouse for HECM loans originated after August 4th, 2014.21 The HUD change alters the 

calculation for loan amounts to be based on the age of the youngest spouse, regardless of 

borrowing status. The surviving non-borrowing spouse, however, will not have access to any 

remaining reverse mortgage loan proceeds (in the form of future monthly disbursements or 

unused credit line) after the death of the borrowing spouse.22 Since these program changes 

introduce an incentive for married couples to borrow jointly, it is likely that most HECMS 

originated after August 4, 2014 will be made in both spouses’ names.

In addition, on January 29, 2015, HUD introduced a change affecting loans with non-borrowing 

spouses made before August 4, 2014. Under the latest change, servicers have the option either 

to (1) call the loan due and payable, or (2) assign “eligible” loans to HUD granting nonborrowing spouses a repayment deferral upon the death of a borrowing spouse.23 Because of the 

complex limitations on eligibility and the amount of servicer discretion, it is unlikely that many 

non-borrowing spouses with pre-August 4, 2014 HECMs will receive a deferral.24

 

 http://portal.hud.gov/hudportal/documents/huddoc?id=14-10ml.pdf.

21 See ML 2014-07. If a borrower is married at the time of the reverse mortgage loan closing and the NBS 

was identified at the time of closing, then the loan may enter a deferral period upon the borrower’s death, 

under certain conditions. The deferral period allows the NBS to remain living in the home indefinitely as 

long as loan requirements continue to be met (e.g., property tax and homeowner’s insurance, primary 

residency, home maintenance).

22 Id.

23 See Mortgagee Letter 2015-03 (January 29, 2015) (ML 2015-03),

 http://portal.hud.gov/hudportal/documents/huddoc?id=15-03ml.pdf.

24Among other things, eligibility requires that the non-borrowing spouse must have been age 62 or older 

at the time the loan was originated, and the current loan balance cannot exceed the home value. 

Additionally, at the time the loan was originated, the non-borrowing spouse would have qualified for 

either (1) a loan amount equal to or greater than their borrowing spouse, or (2) a loan amount equal to 

or greater than the current principal balance of the HECM.
11 CONSUMER FINANCIAL PROTECTION BUREAU 

4.Consumers complain about 

problems with loan servicing

4.1 Consumers complain that loan servicers 

make repaying the loan difficult

When a HECM loan becomes due and payable, borrowers and heirs have a number of options 

for repaying the loan. If the borrower or heirs wish to keep the home, they must pay the loan 

balance in full, or 95 percent of the property’s current appraised value, whichever is lower.25 The 

debt can also be settled by selling the home or transferring a deed in lieu of foreclosure. If the 

borrower or heirs take no action, the lender can foreclose on the home. 

Many consumers express frustration with their loan servicer when attempting to repay the loan. 

Loan servicers are required to notify the borrower or (if deceased) the borrower’s heirs within 

30 days of a reverse mortgage entering “due and payable status.”26 The notification informs 

those with interest in the home that loan repayment has been triggered. The repayment notice 

must describe the options for paying the loan balance and how to satisfy the debt,27 such as for 

example, by selling the home.

 25 24 CFR 206.125(c).

26 Id.

27 Id.
12 CONSUMER FINANCIAL PROTECTION BUREAU 

Consumers complain that loan servicers and lenders do not provide a clear process for paying 

off reverse mortgage debt. Some consumers describe problems with the appraisal process such 

as lengthy delays, improperly performed appraisals, and inflated appraised home values. 

Appraisals are required to establish property values for the reverse mortgage repayment 

process.28 Consumers report that problems with appraisals complicate and delay the repayment 

process for borrowers and their heirs. Delays increase the repayment amount by extending the 

time in which interest accrues. Similarly, an over-valued home unfairly increases the amount 

required to repay the reverse mortgage debt.

Other consumers complain of unresponsive loan servicing departments. Family members of 

deceased borrowers describe frustrating attempts to satisfy reverse mortgage debt obligations 

with loan servicing departments that do not respond to written requests or return phone calls.

One consumer described her frustrating experience of trying to settle her mother’s reverse 

mortgage debt by submitting a deed-in-lieu of foreclosure to the loan servicer. 

“The keys were turned over to the bank in August, 2012. It is now December and they 

say they have been engaged in a title search, but they have been saying this since 

September. In the meanwhile, the estate is being drained of its resources, we are 

paying for maintenance and utilities required by the bank, while waiting for this to be 

finalized.” 

 28 Id.
13 CONSUMER FINANCIAL PROTECTION BUREAU 

4.2 Consumers complain that they are 

facing foreclosure due to non-payment 

of property taxes or homeowners 

insurance

Reverse mortgage borrowers are responsible for paying their own property taxes and 

homeowners insurance. Several consumers describe their struggles to remedy loan defaults 

triggered by non-payment of property taxes and/or homeowners’ insurance. Some consumers 

describe unsuccessful attempts to halt foreclosure proceedings by paying overdue taxes in full or 

through payment plans. Other consumers insist that their loan servicers have determined 

incorrectly that their taxes are past due. 

In an effort to decrease HECM defaults caused by borrowers’ inability to pay real estate taxes 

and insurance, effective March 2, 2015, FHA will require lenders to conduct financial 

assessments of prospective HECM borrowers prior to approving the loan.29 Meanwhile, 

consumers with existing reverse mortgages are likely to continue submitting complaints 

regarding defaults due to non-payment of taxes and insurance. 

4.3 Consumers complain that loan servicers 

fail to keep accurate records

Consumers complain that loan servicers fail to keep accurate records of critical documents. 

Several consumers tell the CFPB they received warning letters of a pending foreclosure due to 

non-payment of property taxes when their tax payments were not past due. 

One consumer described an arduous effort to purchase his father’s home. This consumer was 

asked to provide legal documents to support his status as the heir to his father’s estate in order 

to purchase the home for 95% of its appraised value. The consumer followed up for several 

weeks, but the servicer could not locate the documents.

 29 HUD Mortgagee Letters 2013-27 (September 3, 2013) and 2014-22 (Nov. 10, 2014), 

http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/hecm/hecmml. 
14 CONSUMER FINANCIAL PROTECTION BUREAU 

“She said she couldn’t give me any information because there was nothing in the file 

indicating I was the personal representative of the estate, even though I faxed that 

weeks ago. She wanted me to refax the papers. Somehow the death certificate I faxed 

came through fine, but the rest did not and apparently no one thought it important 

enough to let me know.” 

4.4 Consumers complain that they face

obstacles when attempting to prevent 

foreclosure

Heirs and borrowers complain that servicers delay and impede attempts to cure HECM defaults 

and avoid foreclosure.30 Some consumers describe multiple requests from servicers for the same 

documents when attempting to remedy defaults. In some cases, consumers try to prevent 

foreclosure by paying the reverse mortgage loan balance in full, but do not receive timely 

responses from servicers. One consumer describes unsuccessful attempts to verify her home 

occupancy with her servicer upon returning home from a stay in the hospital. After submitting 

requested documents, her servicer was unresponsive, yet continued to send notices that 

foreclosure proceedings were imminent.

 30 The HECM default rate was nearly 10 percent in 2012. See Stephanie Moulton, Donald R. Haurin & 

Wei Shi, An Analysis of Default Risk in the Home Equity Conversion Mortgage (HECM) Program (July 

18, 2014), https://www.fdic.gov/news/conferences/2014ResearchConf/panel6/shi.pdf.
15 CONSUMER FINANCIAL PROTECTION BUREAU 

5. Conclusion

The reverse mortgage complaints submitted to the CFPB demonstrate the wide range of 

problems some consumers encounter with these loans. 

The largest volume of complaints concern requests for changes to the terms of the loans. Most of 

these requests are to add additional borrowers to extend the life of a loan or for reduced interest 

rates in order to increase the proceeds of a loan. While most of these complaints stem from 

consumer confusion over loan terms and requirements, some consumers report that they were 

given false information at loan origination. 

Many consumers complain that reverse mortgage loan servicers often are slow to respond to 

their inquiries and requests. Some consumers complain that servicers are completely 

unresponsive, or provide inconsistent instructions. Many consumers express extreme 

frustration, while others express fear that they may lose their homes, due to servicers’ 

unresponsiveness and/or poor record keeping. The servicing problems consumers describe are 

exacerbating many of the other problems that borrowers and their families are experiencing 

with reverse mortgages. 

Since the CFPB began accepting reverse mortgage complaints in December, 2011, HUD has 

issued more than 10 policy changes to the HECM program.31 For example, after March 2, 2015, 

financial assessments of prospective HECM borrowers will change. This change is anticipated to 

 31 See HUD, HECM Mortgagee Letters,

http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/hecm/hecmml.
16 CONSUMER FINANCIAL PROTECTION BUREAU 

decrease instances of defaults due to non-payment of real estate taxes and insurance for loans 

originated after March 2, 2015.32

In addition, several of these changes affect surviving non-borrowing spouses. These program 

changes are expected prospectively to result in fewer loan originations in the name of only one 

spouse. 

Notwithstanding the program changes, borrowers and their non-borrowing spouses who 

obtained reverse mortgages prior to August 4, 2014 may likely encounter difficulties in 

upcoming years similar to those described in this Snapshot, i.e., non-borrowing spouses seeking 

to retain ownership of their homes after the borrowing spouse dies. As a result, many of these 

consumers may need notification of and assistance in averting impending possible displacement 

should the non-borrowing spouse outlive his or her borrowing spouse. 

For millions of older Americans, especially those without sufficient retirement reserves, tapping 

into accrued home equity could help them achieve economic security in later life. As the 

likelihood increases that older Americans will use their home equity to supplement their 

retirement income, it is essential that the terms, conditions and servicing of reverse mortgages 

be fair and transparent so that consumers can make informed decisions regarding their options. 

 32 Financial assessments may trigger funding requirements (such as set-asides) for the payment of 

property taxes and insurance. See ML 2014-07; ML 2013-27, supra.