No Complaints about Reverse Mortgages Here, Says Texas Mortgage Regulators

No Complaints about Reverse Mortgages Here, Says Texas Mortgage Regulators

Despite representing nearly 5% of all outstanding American reverse mortgages, Texas is boasting a consumer complaint-free lender industry for borrowers.

It's true that as the explosion in popularity and demand for reverse mortgages from borrowers all over the country has, some would argue inevitably, led to an increase in complaints filed with state and federal consumer protection agencies, organizations, and advocates. But Texas is has successfully evaded even a single official complaint from borrowers relating to reverse mortgages.

Indeed, it seems Texas is once again putting the loan in "lone star state" (OK, we couldn't help ourselves forgive us). According to statements by the Texas Department of Savings and Mortgage Lending spokesperson Chris Schneider, Texas has only received "a few inquiries, but no official complaints."

The comments come in light of Consumers Union reports that claim many reverse mortgage lenders are suspected of unethically running aggressive and misleading advertisements while offering feeble and thin counseling and advising to potential borrowers.

The Consumers Union totes a study by the Government Accountability Office that in 2009 determined 26 entities had made potentially misleading claims in their marketing and promotional materials, although few were from the top reverse mortgage lenders in the country. But that doesn't necessarily indicate that all reverse mortgage companies are predatory in nature and untrustworthy. After all, thousands of lenders practice in our country.

In fact, for as many complaints that have been made against reverse mortgage companies by consumers, there are many more seniors who are happy and satisfied with the unique financial product that allows homeowners aged 62 years or older to turn their home's equity into a cash loan.

The president of the National Reverse Mortgage Lenders Association, Peter Bell, said the Federal Reserve recently created new rules to address some of the issues at the heart of many of the consumer complaints, but that those rules have been shelved for now. The reason is because oversight of the reverse mortgage industry has now fallen under the organizing Consumer Financial Protection Bureau.

New rules are on their way, Bell said, and in the meantime, the industry is "proactive in creating an environment of trust for the consumer." Bell insists that nearly all of the criticism coming from the Consumers Union deal with a small number of the same types of cases.

Just how big is Texas' reverse mortgage industry? It's a whopper. Lenders have issued 37,257 reverse mortgages worth more than $5.3 billion in the past five years. Compare that to the number of reverse mortgages outstanding nationally at 450,000 loans worth an approximated value of $117 billion, and Texans represent 4.5% of the market share.

It's apparent that Texas reverse mortgage lenders are doing a great job at securing an affordable, reasonably-termed loan for the consumers. Besides the availability for reverse mortgage borrowers to complain directly to the Federal Trade Commission that investigates and regulates lenders, Schneider has said borrowers are also welcome to come forward to his department as well.

It all starts with education and a little bit of research into the reverse mortgage lender, he says. "If the public has a concern, they can check with us to make sure the broker is licensed and legitimate," said Schneider, who recommends prospective borrowers go to www.sml.state.tx.us, click on "Search for a RMLO Licensee", and type in said broker's name.

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