Martin & Jones, PLLC
Call today for a Free consultation.

CFPB Investigates Reverse Mortgage Market

The Consumer Financial Protection Bureau (CFPB) is considering issuing rules aimed at preventing abuses in the reverse mortgage market. The agency is responding to an increasing number of claims by consumers who report losing their homes or facing substantial expense as a result of reverse mortgage scams. Complaints have escalated as mainstream lenders such as MetLife, Bank of America, and Wells Fargo have exited the reverse mortgage market. That has allowed smaller mortgage brokers and lenders, many of which have been involved in the problem-plagued subprime lending market, to enter the void left by the departure of the big banks.

Reverse mortgages allow homeowners 62 and older to borrow money against the value of their homes and not pay it back until they move out or die. When used correctly, reverse mortgages can be a valuable tool for seniors who want to stay in their homes and also gain access to money needed for retirement. Seniors who have built up equity in their homes can borrow a percentage of that and take out a lump sum or a line of credit. The loan need not be repaid until the homeowner moves out or dies, but borrowers still must pay property taxes, maintenance, and insurance. Currently, there are more than 775,000 reverse mortgage loans outstanding in the United States.

Reports of abusive practices have greatly increased in recent years, and calls for regulation and protection of seniors have been made by consumer advocates. Complaints include reports of lenders aggressively pitching reverse mortgages to seniors who cannot afford the fees associated with them or about hidden costs. CFPB has received numerous reports from surviving spouses who were told they could be added later, but were not. Those seniors are at the greatest risk of losing their homes. CFPB reported that the default rate for reverse mortgages is now at a record high - approximately 9.4% of loans, up from just 2 percent ten years ago.

A number of consumers have reported that lenders encouraged them to make their older spouses the sole borrower on the loan. Brokers earn more money when they make larger loans with the older spouse as the only borrower. Reverse mortgages also have incentive structures which encourage brokers to steer consumers toward lump sum loans, which carry a fixed interest rate, rather than a line of credit with a variable interest rate. With a lump sum arrangement, the interest charges are added each month, and over time the total debt owed can exceed the amount of the original loan. Brokers earn higher fees on those loans and can reap additional profits when they sell the loans into the secondary market, where they can get rates nearly double those for variable loans. About 70 percent of reverse mortgages are taken in lump sums, up from just 3 percent in 2008, according to CFPB analysis. CFPB is investigating reverse mortgages and contemplating rules designed to increase transparency and uniformity of disclosures.

CFPB is also looking at rules to help assess suitability so as to ensure reverse mortgages are only provided to those seniors for whom there are good reasons for obtaining a reverse mortgage.

No Comments

Leave a comment
Comment Information

Martin & Jones Reviews

  • "I just wanted you to know how much my family and I appreciate the work that you (Mike Riley) and everyone at Martin & Jones have done for us over the years. The initial settlements helped Mom and Dad live comfortably during his illness and afforded him the care that he needed. Since his passing nine years ago, your continued efforts on our behalf have been nothing short of a blessing. Mom, who will be 92 in September, has many medical issues but is still very sharp mentally, and enjoys being able to live at home. I just want you and everyone at Martin & Jones to know how grateful we are."

    Fred G., whose father had mesothelioma
  • "Thank you for everything that you have done for us. We are fortunate to know you. We appreciate all of the hard work, long hours and care that was shown to us before and during the trial. Without your help and representing us, we would not be as blessed as we are now. All of you are very special to us. We know that you have the best and attorneys and staff there is."

    Hazel P.
  • "Thank you for your concern of my well-being every time I spoke with you. It always meant so much. I hear nothing but awful stories of dealing with attorneys and their offices, but I have had nothing but positive experience. You have many special ways of working with people in need of help. Words can never express the way your support has been so helpful. I pray you will continue to help others. I wish you all the best."

    Mary C
  • "Forest, once again, my family and I thank you for obtaining another settlement on behalf of my Father. It's almost uncanny that these checks seem to come at very opportune times. This one comes as we are expecting our fourth grandchild. It will provide her some sound footing towards her future college education, plus help Mom and Dad with the medical expenses. Sometimes, I think my Dad is helping you guys with this. Maybe so. Anyway, thank you again for your hard work."

    Mike G.
  • "I appreciate all you're doing and trying to do for me. I don't think I've ever talked to a nicer attorney than Mike, and his assistant (certified paralegal Marjorie Kartanson). You're real nice people. It really makes you feel better, even with all the problems I have."

    Larry A.
  • "Thank you for the work you have done for Carl and our family. We so much appreciate your sincere professionalism and kindness you showed us. I know Carl is smiling right now and the Lord has blessed us through you. May God bless you."

    Connie M. whose husband Carl worked as a brakeman for CSX Transportation and died of mesothelioma
  • "Thank you for always making me feel welcome and at ease in your office. I respect the work you do and your enthusiasm for it and am grateful for your talents."

    Tracy M.
  • "I would like to leave a testimonial thanking Steven and Allison for their care and understanding. Steven's pursuit and success in getting some compensation for our loss. A final closure of our loss of brother Mike. Thanks to Martin & Jones for looking after Mike's care since his injury in 2005. You have been there for Mike and his family for a long time. Mike passed in 2016 and you stood for the family up to the present (July 2017). Many thanks."

    Dan I.
  • "We would like to express our gratitude to you (Hunt Willis) for accepting our case. First of all, when I called this law firm, a very sweet and kind lady answered the telephone and gave me assurance by asking and going over the accident with me, while my husband was in the hospital. I felt assured I was doing the right thing for us. She was so helpful in so many ways. What a professional lady. Secondly, we are much pleased that you have settled this case with the insurance company to receive the proper amount to assist us in so many ways. My husband and I are very happy with you and the firm in handling our case. You made us have confidence in your professional and integrity along with your assistant Ms. Routh, when you both came to see us in our home, in which we saw your compassion and thoughtfulness at that time. We will never forget what you have done for us, and we thank the lord for directing me to contact this firm. I’m glad I did."


"Thank you for your concern of my well-being every time I spoke with you. It always meant so much. I hear nothing but awful stories of dealing with attorneys and their offices, but I have had nothing but positive experience. You have many special ways of working with people in need of help. Words can never express the way your support has been so helpful. I pray you will continue to help others. I wish you all the best."

Mary C
View More Reviews
Contact US Get Help Now

Send us an email or call us today at 800-662-1234 to speak with an attorney about your claim or to arrange a free consultation. It costs nothing to call and there is no obligation. In fact, we are not paid until your case is resolved. Se habla español. If you are unable to travel to one of our offices in Raleigh, Durham and Wilmington, we will meet with you at your location.

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy

Raleigh Office
410 Glenwood Avenue
Suite 200
Raleigh, NC 27603

Toll Free: 800-662-1234
Phone: 919-821-0005
Raleigh Law Office Map

Wilmington Office
1213 Culbreth Drive
Suite 121
Wilmington, NC 28405

Toll Free: 800-662-1234
Phone: 910-256-4005
Wilmington Law Office Map

Durham Office
302 East Pettigrew Street
Suite 330
Durham, NC 27701

Toll Free: 800-662-1234
Phone: 919-544-3000
Durham Law Office Map