The Consumer Financial Protection Bureau has been receiving more mortgage-related concerns from older Americans since it started collecting complaints in 2011. As of April 1, 2017, the bureau received around 1,163,200 total complaints across all states.
Individuals 62 years old and above had a total of 103,000 complaints since then, with 26 percent of these concerns being mortgage-related. Mortgage-related problems for people of all other age groups only account for 16 percent. The Golden State leads as the state with most complaints submitted by seniors since 2011. California has had 14,933 concerns submitted to the CFPB.
California is followed by Florida with 11,768, and New York with 6,098 complaints. It should be noted, however, that these are some of the country’s most populous states. This contributes to the volume of complaints from the said states. The lowest number of complaints since 2011 was from North Dakota with just 59 filed, putting it on the last spot.
Mortgage Payment is Seniors’ Biggest Concern
The top problem with regard to mortgage-related concerns from seniors is the inability to pay the mortgage. At a closer look, CFPB saw that payment-related problems account for 39 percent of the reverse mortgage issues. Other concerns about reverse mortgages were something to do with loan application misconceptions and receiving timely disbursements from lenders. Another significant issue concerning reverse mortgage was about the process following the death of the senior.
A reverse mortgage is a loan program specifically offered to individuals 62 years old or older. Under this mortgage program, the senior can withdraw money out from his/her home’s equity. The mortgage does not become due and payable unless the senior moves out, sells the property, or dies. Until such time, it is the lender who pays the borrower via scheduled disbursements.
FHA Educates Applicants About Reverse Mortgage
The Federal Housing Administration’s reverse mortgage program is called the Home Equity Conversion Mortgage (HECM). Just like any other loan, the borrower has to eligible of the loan. For the benefit of the borrower and his/her family, the FHA will require any borrower to undergo a housing counseling. This is to ensure that the would-be HECM borrower is well informed about the program and its nuts and bolts. To make it more convenient, those seniors who cannot or are not willing to travel to a housing counseling agency may be visited by a counselor at home or may have an approved telephone counseling.
It is best to ask an FHA representative or FHA-approved lender about this and all the other aspects of HECM.