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65 65 65 INVESTMENT GOVERNMENT PROPERTY PRESERVATION Journal Follow Us At: @DSNewsDaily FHA & CFPB URGED TO CREATE ADDITIONAL REVERSE MORTGAGE PROTECTIONS ere are about 480,000 outstanding reverse mortgages currently throughout the country, and according to the National Consumer Law Center (NCLC), that number is only expected to grow as baby boomers choose to age in place. But according to a new report entitled "Unmet Promises: Reverse Mortgage Servic- ing Challenges and How to Preserve Housing Stability for Older Adults," reverse mortgages— which are a financial product offered to borrow- ers over the age of 62 used to let them borrow against the equity of their home without an additional monthly payment—end up with the borrower going into foreclosure more often than should be seen. In addition, the vast majority of these loans are insured by the Federal Housing Administration (FHA). "e FHA reverse mortgage program has not lived up to its full potential," said Sarah Bolling Mancini, Staff Attorney at the National Consumer Law Center and primary author of the report. "Based on the information uncovered in this report, it is imperative that the FHA and the CFPB act quickly to prevent any additional home losses in vulnerable populations." Mancini said that data shows people of color have been the most popular user of reverse mortgages and thus the most likely to go into foreclosure. is crisis of preventable reverse mortgage foreclosures is important when it comes to addressing racial wealth and home- ownership gaps as well. "e goal of increasing racial equity in homeownership demands attention to home preservation in addition to opening the door to new homebuyers of color," said Odette Williamson, Director of NCLC's Racial Justice Initiative. "Preventing reverse mortgage foreclo- sures is one crucial step in that process, as this report shows." In addition, the report identifies the most common reasons for default—which include poor communication between parties and issues with services and red tape around obtaining a repayment plan—and offers suggestions to both the FHA and the CFBP can implement to mitigate losses. For the FHA, Mancini suggests that they allow flexibility in property charge mitigation policies and to require a loss mitigation review. For the CFPB, the author suggested three policy changes: include reverse mortgages in the Real Estate Settlement Procedures Act (RESPA) mortgage servicing tools, work with the FHA on standards for plain language communications with borrowers, and to prior- itize reverse mortgage servicer supervision and enforcement. "Reverse mortgage loans fill an important gap in the social safety net, allowing older homeowners to remain in their homes, promot- ing their health and wellbeing, with minimal burden to taxpayers," Mancini added. "But with an ever-increasing number of baby boomers en- tering retirement in greater financial insecurity than past generations, the time to address prob- lems with FHA's reverse mortgage program is now. Without change, reverse mortgages won't live up to their significant promise."