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STATS SHOW TROUBLING TRENDS FOR REVERSE MORTGAGES While reverse mortgages can be a boon to seniors as they head into retirement, a new report from the National Center for Policy Analysis (NCPA) says recent trends show trouble in the market that may cost taxpayers billions of dollars. One major problem, the group notes, is that borrowers are now applying for reverse mortgages at earlier ages. According to a 2012 MetLife survey, the average borrower is now 71.5 years old; however, one in five borrowers is between the ages of 62 and 64, putting them at the low end of the eligibility range. Moreover, two-thirds of borrowers are now using reverse mortgages to pay down debt—including conventional mortgage debt. Approximately 84 percent of borrowers under the age of 70 have some kind of debt to pay; 72 percent are dealing with mortgage debt (with or without other debts). About 62 percent of borrowers age 70 and older had mortgage debt to contend with. In addition, the MetLife survey found that one-third of homeowners using reverse mortgages have a mortgage balance that is at least half of their home value. Pamela Villarreal, a senior fellow and retirement expert at NCPA, expects the "troubling trend will increase as more baby boomers enter retirement with mortgage debt than previous generations." What's more, Villarreal says that many lenders aren't doing enough to properly educate consumers on their rights and responsibilities regarding reverse mortgages. An audit of 15 lenders performed by the Government Accountability Office (GAO) found that none of the audited firms covered all of the required topics, and seven did not offer up any information on other, less complicated financial products. Fourteen of the 15 lenders failed to ask homeowners if they had signed a contract or agreement with an estate planning service—a question required by the Federal Housing Administration (FHA), which insures and regulates reverse mortgage products. In light of this fact (and the fact that 9.4 percent of reverse mortgages are at risk of default, according to a report from the Consumer Financial Protection Bureau), Villarreal suggests FHA should step back from the market altogether, especially considering the agency's shaky financial status. (FHA has taken steps in recent months to reform its reverse mortgage pricing, citing the considerable damage its old program caused.) "With a much higher default rate than traditional mortgages, reverse mortgages and their inherent risks should be left up to the market, not the Federal Housing Administration," Villarreal said. "If lenders cannot and will not bear the risk, the reverse mortgage market should not exist in the first place." INCORRECT, OUTDATED INFORMATION MOST COMMON ISSUE ON CREDIT REPORTS Nearly a quarter of Americans—23 percent— say they have encountered issues with their credit reports, according to a recent FindLaw.com survey. Incorrect or outdated negative marks is the main problem cited, with 10 percent reporting inaccurate or outdated credit history details related to delinquency payments, payment history, collection actions, court judgments, and bankruptcies. At 9 percent, incorrect or outdated personal information, such as one's address, marital status, and work history, is the second most commonly reported problem. Other issues reported by survey respondents included identity theft or credit information getting mixed up with someone else's (5 percent), as 34 well as credit scores incorrectly reported as being too low (3 percent). Four percent said they have been denied credit because of incorrect information on their credit report. Although credit report problems appear to be fairly common, the survey found 68 percent of people who did encounter an issue reported the problem was corrected to their satisfaction, while 18 percent said the problem was not fixed. For those who had more than one issue, 14 percent said they were able to get at least one issue resolved. The survey results were based on responses gathered in March from more than 1,000 participants. HOUSING IMPROVES IN KEY AREAS, BUT HOMEOWNERS STILL NEED ASSISTANCE In the Obama administration's latest assessment on housing, the market was described as showing "important progress across many key indicators," but millions of underwater homeowners call for a need to provide homeowner assistance, according to the May housing scorecard released jointly last month by Treasury and HUD. "As the May housing scorecard indicates, the Obama Administration's policies and actions over the last four years to speed housing recovery are continuing to show important signs of progress," said Kurt Usowski, HUD deputy assistant secretary for economic affairs. "Despite the positive news, we have important work ahead since there are so many families and individuals still—underwater with mortgage balances higher than their home's value," he added. To aid the recovery and assist struggling borrowers, the administration decided to provide a two-year extension for the Making Home Affordable program (MHA), which includes the Home Affordable Modification Program (HAMP). Another program under MHA that received an extension was the Home Affordable Foreclosure Alternatives (HAFA) program, which has helped about 154,000 homeowners avoid foreclosure through a short sale or deedin-lieu of foreclosure. "Making Home Affordable provides standards and accountability for the mortgage industry that will now help additional homeowners avoid foreclosure through 2015," said Tim Massad, assistant Treasury secretary for financial stability. To review large servicers who are taking part in the program, Treasury assesses major servicers in three categories: identifying and contacting homeowners; homeowner evaluation and assistance; and program reporting, management and governance. According to the most recent Making Home Affordable Program report, servicers have improved their ability to effectively evaluate homeowners in the "second look disagree" category, which is the rate Treasury's program reviews disagree with a servicer's decision to find a homeowner ineligible for assistance. Among top servicers, the average second look disagree rate was under 1 percent in the first quarter of this year, according to the report. Servicers also improved their ability to accurately calculate a homeowner's income when assessing eligibility for a modification, with top servicers averaging an income calculation error rate below 2 percent.

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