US Congressman urges CFPB to take stronger action against reverse mortgage industry
Representative Josh Harder (R), a US Congressman serving the 10th District of the State of California encompassing parts of the San Joaquin Valley, recently submitted a letter to Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra, urging the Bureau to take tougher action against the reverse mortgage industry.
Citing a recent settlement the Bureau reached with reverse mortgage lender American Advisors Group (AAG), Representative Harder says such a case highlights the need for tougher regulatory action against “bad players in the mortgage market. housing ”as he stated on his website when announcing the letter’s submission. However, the congressman does not cite any specific action that he believes should be taken by the CFPB and does not maintain any committee memberships in the House that indicate prior engagement with industry.
Representative Harder’s office did not respond to requests for comment at press time. When contacted, an AAG representative declined to comment on the contents of the letter. A representative from the National Reverse Mortgage Lenders Association (NRMLA) has chosen not to comment at this time.
Content of the letter
Representative Harder did not indicate in his letter what had caused his attention to turn to the reverse mortgage industry outside of the aforementioned settlement, only saying that more action should be taken. He calls the reverse mortgage product one that can help American seniors, but disputes what he describes as a light settlement with a big lender in the space.
“Reverse mortgages offer a lifeline to elderly homeowners by giving them additional income to help them in an emergency or to offset a fixed income,” Harder said in the letter. “But deceptive and manipulative practices, such as house price inflation and false advertising, have turned that safety net into a trap.”
The recent CFPB regulation stated that seniors who pay out of pocket for home appraisals only learned later that they would not be entitled to as many loan products as they initially thought, he said, indicating that Chopra and the CFPB needed to take further action. .
“Our seniors are already one of the most vulnerable populations and many of them already face financial insecurity,” says Harder. “Scams like these pose a threat to the elderly and should be punished by the CFPB whenever possible. “
He goes on to describe that the recent settlements between reverse mortgage lenders and the Bureau are a “slap on the wrist,” he says, and calls for “tougher penalties for reverse mortgage lenders” who have proven to be “prey. populations ”, he concluded.
No prior interaction with the reverse mortgage industry, bipartite support to HECM
Representative Harder currently sits on the Agriculture and Credit committees in the United States House of Representatives, including as a member of subcommittees related to biotechnology, livestock, labor and the environment. , respectively. Representative Harder was not a member of the House Financial Services Committee or its Housing, Community Development and Insurance subcommittee, which in the past conducted proceedings directly related to the category of reverse mortgage products.
The bipartisan members of this subcommittee have already shown their support for the Home Equity Conversion Mortgage (HECM) program administered by the Federal Housing Administration (FHA). In a late 2019 hearing specifically on the HECM program, Republican Representatives Lance Gooden (R-Tex.) And Scott Tipton (R-Colo.) Expressed general support. Representative Maxine Waters (D-Calif.), A colleague of Representative Harder in California and chair of the Financial Services Committee, described her progress on the topic during the 2019 hearing, moving from skepticism to support .
“There were years where I got concerned with the program and wondered whether or not it was doing what it was supposed to do,” Waters said at the time. “And once again let me reiterate that I recognize that it has a value that needs to be protected and a value that needs to be extended so that we make sure we provide the kind of safety and security that our elders have. need and deserve. ”
Chopra and calls for more severe fines
In his letter, Harder explicitly states that he believes the CFPB should impose stricter penalties on reverse mortgage lenders for breaches, deeming the amounts cited in previous regulations to be insufficient. In the past, Chopra himself has advocated for tougher fines for companies that violate specific laws and standards.
During his tenure as Commissioner of the Federal Trade Commission (FTC), Chopra repeatedly expressed his disagreement with settlement decisions that he considered too narrow or too light on enforcement. He expressed a dissenting opinion on a 2019 settlement decision related to the business practices of tech giant and social media platform Facebook. The FTC alleged that the social media giant violated its promises of privacy to consumers and subsequently violated a 2012 Commission order relating to the protection of user data. Then-commissioner Chopra called the regulation insufficient in a 2019 dissenting opinion.
“In this case, I think the commissioners halted the investigation too early, leaving too many stones unturned, in favor of this proposed settlement,” Chopra said at the time. “The fine print of this settlement gives Facebook plenty of cause for celebration, especially with regard to blanket immunity for unspecified violations by Facebook and its executives. This is a disappointing precedent for the FTC, as more companies can now look for ways to purchase broad immunity. “
Now, however, a member of Chopra’s political party says that the settlement action against a reverse mortgage lender, as led by an agency run by Chopra, amounts to a “slap on the wrist.” When contacted for comment, a CFPB representative indicated that the Board and Director Chopra had not yet received the letter.
“The CFPB will review the letter upon receipt and respond to Representative Harder,” a CFPB spokesperson told RMD.
Read the letter submitted by Representative Harder to CFPB Director Chopra.