Misplaced Pages

#573426

106-599: Regulators and academics have given mixed commentary on the reverse mortgage market. Some economists argue that reverse mortgages may benefit the elderly by smoothing out their income and consumption patterns over time. However, regulatory authorities, such as the Consumer Financial Protection Bureau , argue that reverse mortgages are "complex products and difficult for consumers to understand", especially in light of "misleading advertising", low-quality counseling, and "risk of fraud and other scams". Moreover,

212-505: A preliminary injunction and allowed Mulvaney to begin serving as CFPB Acting director. Seila Law LLC (Seila Law), a law firm that provided debt relief services, was under investigation by the CFPB. As part of its investigation, the CFPB issued a civil investigative demand (CID) to Seila Law, which required Seila Law to produce certain documents. Seila Law declined to comply with the CID and challenged

318-452: A "radical structure" that "is controlled by a single individual who cannot be fired for poor performance and who exercises sole control over the agency, its hiring and its budget." Moreover, the committee alleged a lack of financial transparency and a lack of accountability to Congress or the President. Committee Vice Chairman Patrick McHenry , expressed particular concern about travel costs and

424-412: A $ 55 million renovation of CFPB headquarters, stating "$ 55 million is more than the entire annual construction and acquisition budget for GSA for the totality of federal buildings." In 2014, some employees and former employees of the CFPB testified before Congress about an alleged culture of racism and sexism at the agency. Former employees testified they were retaliated against for bringing problems to

530-653: A Government Accountability Office ("GAO") investigation, commenced on July 12, 2013." On August 22, 2013, one month after Morgan Drexen's lawsuit, the CFPB filed its own lawsuit against Morgan Drexen in the United States District Court for the Central District of California alleging that Morgan Drexen charged advance fees for debt relief services in violation of the Telemarketing Sales Rule and engaged in deceptive acts and practices in violation of

636-452: A company, it's hard to get your reputation back. Mick Mulvaney , as acting director of the CFPB, removed all 25 members of the agency's Consumer Advisory Board on June 5, 2018, after eleven of them held a press conference on June 3 in which they criticized him. On February 13, 2021, President Joe Biden formally submitted to the Senate the nomination of Rohit Chopra to serve as director of

742-474: A compounding rate. This means that borrowers who opt for a HECM line of credit can potentially gain access to more cash over time than what they initially qualified for at origination. The line of credit growth rate is determined by adding 1.25% to the initial interest rate (IIR), which means the line of credit will grow faster if the interest rate on the loan increases. On 3 September 2013 HUD implemented Mortgagee Letter 2013-27, which made significant changes to

848-543: A different property if the owner moves. Prepayment of the loan—when the borrower pays the loan back before it reaches term—may incur penalties, depending on the program. The FHA-insured Home Equity Conversion Mortgage, or HECM, was signed into law on February 5, 1988, by President Ronald Reagan as part of the Housing and Community Development Act of 1987 . The first HECM was given to Marjorie Mason of Fairway , Kansas , in 1989 by James B. Nutter and Company . In

954-843: A mortgage. This research caused a reform in reverse mortgages in 2013: homeowners could only withdraw 60% of their available proceeds in the first year. The retired population normally does not have the same level of income to afford increases in taxes and insurance as individuals with a traditional mortgage. In the United States, reverse mortgage borrowers as well as any homeowner can face foreclosure if they do not maintain their homes or keep up to date on homeowner's insurance and property taxes . The FBI , Inspector General , and HUD urge American consumers, especially senior citizens, to be cautious when considering reverse mortgages to avoid scams . HUD specifically warns consumers to "beware of scam artists that charge thousands of dollars for information that

1060-587: A new record for both the monthly and the annual increases. Daniel Wong at Better Dwelling wrote that, the jump represented an 11.57% increase from September, which is the second biggest increase since 2010, 844% more than the median monthly pace of growth. The annual increase of 57.46% is 274% larger than the median annualized pace of growth. Reverse mortgages in Canada are available through three financial institutions - Home Equity Bank, Equitable Bank and Bloom Financial. No reverse mortgages issued in Canada are insured by

1166-409: A property value of $ 250,000. The money from a reverse mortgage can be distributed in four ways, based on the borrower's financial needs and goals: The adjustable-rate HECM offers all of the above payment options, but the fixed-rate HECM only offers lump sum. The line of credit option accrues growth, meaning that whatever is available and unused on the line of credit will automatically grow larger at

SECTION 10

#1732880496574

1272-428: A reverse mortgage applicant fails to meet the satisfactory credit or residual income standards required under the new financial assessment guidelines implemented by FHA on March 2, 2015, the lender may require a Life Expectancy Set Aside, or LESA. A LESA carves out a portion of the reverse mortgage benefit amount for the payment of property taxes and insurance for the borrower's expected remaining life span. FHA implemented

1378-451: A reverse mortgage begun before 18 September 2012, the contract specifies whether the borrower is protected when the loan balance ends up being more than the value of the property. When the reverse mortgage contract ends and the borrower's home is sold, the lender will receive the proceeds of the sale and the borrower cannot be held liable for any debt in excess of this (except in certain circumstances, such as fraud or misrepresentation). Where

1484-478: A reverse mortgage in Australia, Reverse mortgages in Australia can be as high as 50% of the property's value. The exact amount of money available (loan size) is determined by several factors: The cost of getting a reverse mortgage depends on the particular reverse mortgage program the borrower acquires. These costs are frequently rolled into the loan itself and therefore compound with the principal. Typical costs for

1590-519: A reverse mortgage set up as an annuity or as a line of credit should not affect Government Income Support entitlements. However, income from a reverse mortgage set up as a lump sum could be considered a financial investment and thus deemed under the Income Test; this category includes all sums over $ 40,000 and sums under $ 40,000 that are not spent within 90 days. Most reverse mortgages must be repaid (including all unpaid interest and fees) when they leave

1696-399: A reverse mortgage. Anyone who wants to engage in credit activities (including lenders, lessors and brokers) must be licensed with ASIC or be a representative of someone who is licensed (that is, they must either have their own licence or come under the umbrella of another licensee as an authorised credit representative or employee) (ASIC) Eligibility requirements vary by lender. To qualify for

1802-480: A single transaction by eliminating the need for a second closing. Texas was the last state to allow for reverse mortgages for purchase. Unlike traditional forward mortgages, there are no escrow accounts in the reverse mortgage world. Property taxes and homeowners insurance are paid by the homeowner on their own, which is a requirement of the HECM program (along with the payment of other property charges such as HOA dues). If

1908-710: A system that would provide for adequate disclosure and that would set high standards of self-regulation, backed by strong government supervision and powers to enforce proper practices. 1967 – the Minister of Finance introduced legislation to establish the Canada Deposit Insurance Corporation (CDIC) to ensure the safety of small deposits and bring about a gradual improvement in the minimum financial standard of deposit-taking institutions in Canada. In 1983, legislative amendments extended CDIC's mandate to include assisting to maintain public confidence and stability in

2014-530: A unilateral actor insulated from Presidential control," Chief Justice John Roberts wrote in the majority opinion, which was joined by his conservative colleagues. The statutes around the Director's position on the CFPB were considered severable from the remaining structure of the CFPB, and the Court ordered that "The agency may therefore continue to operate, but its Director, in light of our decision, must be removable by

2120-653: Is an independent agency of the Government of Canada reporting to the Minister of Finance created "to contribute to public confidence in the Canadian financial system". It is the sole regulator of banks, and the primary regulator of insurance companies, trust companies, loan companies and pension plans in Canada. The current Superintendent is Peter Routledge, who was appointed in June 2021. He replaced Jeremy Rudin, who retired. The term of

2226-532: Is free from HUD". In a 2018 study, reverse mortgage borrowers have significantly higher financial and housing satisfaction compared to nonborrowers. Reverse mortgages received fewer complaints than any other mortgage product. Among a total of 32,000 consumer complaints received by the Consumer Financial Protection Bureau (CFPB) in 2021, only approximately 300 of those complaints — under 1% — had to do with reverse mortgage loans. To qualify for

SECTION 20

#1732880496574

2332-406: Is not generally true. While their are some that are quite untraceable, like Monero, that is usually not the case. Most cryptocurrencies are public by default, including major currencies like Bitcoin or Ethereum, which list all transactions on a public ledger viewable by anyone. In 2016, the CFPB took its first enforcement action against a company that the CFPB alleged had failed to properly protect

2438-405: Is still considered a loan and therefore is not taxable income. It therefore does not affect government benefits from Old Age Security (OAS) or Guaranteed Income Supplement (GIS) . The reverse mortgage comes due—the loan plus interest must be repaid—when the borrower dies, sells the property, or moves out of the house. Depending on the program, the reverse mortgage may be transferable to

2544-635: The Competitive Enterprise Institute , challenged the constitutionality of provisions of the CFPB. One year later, in August 2013, a federal judge dismissed the lawsuit because the plaintiffs had failed to show that they had suffered harm. In July 2015, the United States Court of Appeals for the District of Columbia Circuit affirmed in part and reversed in part, holding that the bank, but not

2650-613: The Consumer Financial Protection Safety and Soundness Improvement Act of 2013 (H.R. 3193; 113th Congress) was introduced into the United States House of Representatives. The bill would have created a five-person commission and removed it from the Federal Reserve System. The CFPB would have been renamed the "Financial Product Safety Commission". The bill was also intended to make it easier to override

2756-537: The Consumers Union claim that it is a "vital tool that can help consumers make informed decisions". CFPB detractors argue that the CFPB database is a "gotcha game" and that there is already a database maintained by the Federal Trade Commission although that information is not available to the public. On January 4, 2012, Barack Obama issued a recess appointment to install Cordray as director through

2862-622: The Dodd–Frank Wall Street Reform and Consumer Protection Act , during the 111th United States Congress in response to the late-2000s recession and financial crisis . The agency was originally proposed in 2007 by then Harvard Law School professor Elizabeth Warren , who later became a US senator. The proposed CFPB was actively supported by Americans for Financial Reform , a newly created umbrella organization of some 250 consumer, labor, civil rights and other activist organizations. On September 17, 2010, President Obama announced

2968-581: The Domestic Stability Buffer (DSB), a capital buffer that mandates a portion of the percentage of loans that Canada's six largest banks must keep in reserve in case of adverse circumstances such as a financial downturn where some borrowers may be unable to keep making payments on their loans. Late 1800s – establishment of the Office of the Superintendent of Insurance (OSI), which subsequently became

3074-1072: The Federal Reserve , the Federal Trade Commission , the Federal Deposit Insurance Corporation , the National Credit Union Administration and even the Department of Housing and Urban Development . The bureau is an independent unit located inside and funded by the United States Federal Reserve , with interim affiliation with the U.S. Treasury Department . The CFPB writes and enforces rules for financial institutions, examines both bank and non-bank financial institutions , monitors and reports on markets, as well as collects and tracks consumer complaints. The CFPB opened its website in early February 2011 to accept suggestions from consumers via YouTube , Twitter , and its own website interface. According to

3180-549: The Hatch Act as Director of the CFPB after being investigated by the Office of Special Counsel (OSC). On May 21, 2018, US President Donald Trump signed into law Congressional legislation repealing the enforcement of automobiles lending rules. On May 24, 2018, Trump signed into law the Economic Growth, Regulatory Relief and Consumer Protection Act , exempting dozens of banks from the CFPB's regulations. On September 26, 2013,

3286-821: The United States Office of Special Counsel , the Social Security Administration , and the Federal Housing Finance Agency , and temporarily for one year during the American Civil War for the Office of the Comptroller of the Currency . Roberts wrote that the three current uses "are modern and contested. And they do not involve regulatory or enforcement authority comparable to that exercised by

Reverse mortgage - Misplaced Pages Continue

3392-566: The United States Supreme Court ruled that the president can remove the director without cause but allowed the agency to remain in operation. According to former Director Richard Cordray , the Bureau's priorities are mortgages, credit cards and student loans . The CFPB qualifies as a large independent agency that was designed to consolidate its employees and responsibilities from a number of other federal regulatory bodies, including

3498-580: The United States Treasury Department , the bureau is tasked with the responsibility to "promote fairness and transparency for mortgages , credit cards , and other consumer financial products and services". According to its web site, the CFPB's "central mission...is to make markets for consumer financial products and services work for Americans—whether they are applying for a mortgage, choosing among credit cards, or using any number of other consumer financial products". In 2016 alone most of

3604-443: The financial crisis of 2007–08 and the subsequent Great Recession and is an independent bureau within the Federal Reserve . Throughout its existence, the Bureau has been persistently targeted by Republican politicians and the financial industry; it is one of the agencies that Project 2025 advocates that Congress should cut. The CFPB's status as an independent agency has been subject to many challenges in court. In June 2020,

3710-510: The Bureau claims that many consumers do not use reverse mortgages for the positive, consumption-smoothing purposes advanced by economists. In Canada, the borrower must seek independent legal advice before being approved for a reverse mortgage. In the United States, reverse mortgage borrowers, similarly to other mortgage borrowers, can face foreclosure if they do not maintain their homes or keep up to date on homeowner's insurance and property taxes. Reverse mortgages are available in Australia. Under

3816-543: The CFPB "has curtailed abusive debt collection practices, reformed mortgage lending, publicized and investigated hundreds of thousands of complaints from aggrieved customers of financial institutions, and extracted nearly $ 12 billion for 29 million consumers in refunds and canceled debts." That figure had risen to $ 19 billion by 2024. The CFPB has created a number of personal finance tools for consumers, including Ask CFPB, which compiles plain-language answers to personal finance questions, and Paying for College, which estimates

3922-500: The CFPB decisions. It passed in the House of Representatives on February 27, 2014 and was received by the Senate on March 4. It was never considered in the Democratic controlled Senate. Two lawsuits were filed in the early years of the CFPB; they were both dismissed by federal courts, but one was appealed and is still ongoing. The first one, filed on June 21, 2012, by a Texas bank along with

4028-475: The CFPB structure, with a sole director that could only be terminated for cause, was unconstitutional as it violated the separation of powers, vacating the lower court judgement and remanding the case for review. The Court recognized that the statutes around the director of the CFPB was severable from the rest of the statute establishing the agency, and thus "The agency may therefore continue to operate, but its Director, in light of our decision, must be removable by

4134-606: The CFPB's structure is constitutional, the Fifth Circuit in Collins v. Mnuchin (2018) held that the structure of the Federal Housing Finance Agency —another agency whose director can be removed only for cause—violated the separation of powers. The Supreme Court granted certiorari in Seila Law on October 18, 2019, and heard oral argument on March 3, 2020. The Court issued its decision on June 29, 2020. The 5–4 decision ruled that

4240-427: The CFPB, was removed from consideration as the bureau's first formal director after Obama administration officials became convinced Warren could not overcome strong Republican opposition. On July 17, President Obama nominated former Ohio Attorney General and Ohio State Treasurer Richard Cordray to be the first formal director of the CFPB. Prior to his nomination, Cordray had been hired as chief of enforcement for

4346-511: The CFPB. His nomination was approved on September 30, 2021, by a 50-48 vote. In December 2021, CFPB fined LendUp $ 100,000 due to deceptive marketing and fair lending violations, and the company was required to stop issuing new loans. In June 2024, the CFPB proposed banning using medical debt in credit reports or loan decisions. In July 2024, the CFPB gave Zelle a choice between a settlement or litigation around its handling of fraud and scams on its platform. From its creation until 2017,

Reverse mortgage - Misplaced Pages Continue

4452-528: The CFPB." Roberts also wrote that the CFPB structure "is also incompatible with the structure of the Constitution, which—with the sole exception of the Presidency—scrupulously avoids concentrating power in the hands of any single individual." Roberts referred back to the precedent established by Humphrey's Executor and Morrison as a basis for the majority's decision. Justice Elena Kagan wrote

4558-467: The Canadian financial system. Early 1960s – Porter Royal Commission reviewed structural and operational issues affecting the financial system and financial institutions in Canada. The commission's report concluded the financial system was sound, but developments had moved beyond the current state of laws and regulatory practices. Porter argued the public could not be insulated from loss in dealing with public institutions and markets. The Commission called for

4664-608: The Consumer Financial Protection Act (CFPA). The CFPB won this lawsuit and Morgan Drexen was ordered to pay $ 132,882,488 in restitution and a $ 40 million civil penalty. In October 2016, the Court of Appeals for the District of Columbia Circuit ruled that it was unconstitutional for the CFPB director to be removable by the president of the United States only for cause, such as "inefficiency, neglect of duty or malfeasance." Circuit Judge Brett Kavanaugh , joined by Senior Circuit Judge A. Raymond Randolph , wrote that

4770-403: The Consumer Financial Protection Bureau. In a 2010 survey of elderly Americans, 48% of respondents cited financial difficulties as the primary reason for obtaining a reverse mortgage and 81% stated a desire to remain in their current homes until death. The total pool of money that a borrower can receive from a HECM reverse mortgage is called the principal limit (PL), which is calculated based on

4876-694: The Department of Insurance (DOI). The DOI was responsible for overseeing federally licensed life insurance companies, property and casualty insurance companies, trust and loan companies and pension plans, and for providing actuarial services to the government. 1925 – the Office of the Inspector General of Banks was established in response to the Home Bank failure and was responsible for regulating Canada's chartered banks. Early 1930s – Royal Commission on Banking and Currency reviewed banking and currency issues in

4982-630: The District of Columbia , alleged that the "CFPB's structure insulates it from political accountability and internal checks and balances in violation of the United States Constitution. Unbridled from constitutionally-required accountability, CFPB has engaged in ultra vires and abusive practices, including attempts to regulate the practice of law (a function reserved for state bars), attempts to collect attorney-client protected material, and overreaching demands for, and mining of, personal financial information of American citizens, which has prompted

5088-525: The FVRA to designate an acting CFPB Director. The OLC memo maintained that "both the Vacancies Reform Act and [§1011(b)(5) of Dodd-Frank] are available for filling on an acting basis a vacancy that results from the resignation of the CFPB's Director" but that "when the President designates an individual...outside the ordinary order of succession, the President's designation necessarily controls." This position

5194-408: The HECM reverse mortgage in the United States, borrowers generally must be at least 62 years of age and the home must be their primary residence (second homes and investment properties do not qualify). On April 25, 2014, FHA revised the HECM age eligibility requirements to extend certain protections to spouses younger than age 62. Under the old guidelines, the reverse mortgage could only be written for

5300-627: The House Financial Services Committee's Jeb Hensarling , to repeal the Dodd–Frank Wall Street Reform and Consumer Protection Act , passed the House on June 8, 2017. Also in June 2017, the Senate was crafting its own reform bill. Testimony in US Congressional hearings of 2017 have elicited concerns that the wholesale publication of consumer complaints is both misleading and injurious to the consumer market. Rep. Barry Loudermilk (R-GA) said at one such congressional hearing, "Is

5406-564: The LESA to reduce defaults based on the nonpayment of property taxes and insurance. The American Bar Association guide advises that generally, The money received from a reverse mortgage is considered a loan advance. It therefore is not taxable and does not directly affect Social Security or Medicare benefits. However, an American Bar Association guide to reverse mortgages explains that if borrowers receive Medicaid , SSI , or other public benefits, loan advances will be counted as "liquid assets" if

SECTION 50

#1732880496574

5512-411: The President at will." Chief Justice John Roberts wrote the majority opinion joined by conservative Justices Clarence Thomas , Samuel Alito , Neil Gorsuch , and Brett Kavanaugh . Roberts wrote that the CFPB structure with a single point of leadership that could only be removed for cause "has no foothold in history or tradition", and has only been used in four other instances: three current uses for

5618-520: The President at will." The dissenting opinion, written by Justice Elena Kagan , stated that the majority's decision has the court "second-guessing" the two political branches of government (Congress and the president) on how to structure the executive branch and "wipes out a feature of [the CFPB] its creators thought fundamental to its mission—a measure of independence from political pressure." On November 24, 2017, Director Cordray appointed Leandra English to

5724-404: The President's power to remove subordinate officials at will." The dissenting Justices did concur on the matter of severability of the remaining structure of the CFPB outside of the director. Office of the Superintendent of Financial Institutions The Office of the Superintendent of Financial Institutions ( OSFI ; French : Bureau du surintendant des institutions financières , BSIF )

5830-661: The Responsible Lending Laws, the National Consumer Credit Protection Act was amended in 2012 to incorporate a high level of regulation for reverse mortgage. Reverse mortgages are also regulated by the Australian Securities and Investments Commission (ASIC) requiring high compliance and disclosure from lenders and advisers to all borrowers. Borrowers should seek credit advice from an accredited reverse mortgage specialist before applying for

5936-757: The Supreme Court's prior decisions upholding for-cause removal in Humphrey's Executor and Morrison were "controlling". It also referred approvingly to the en banc decision of the DC Circuit in PHH Corp. v. CFPB (2018), in which the Circuit found that the structure of the CFPB was constitutional. There was arguably a circuit split on the question presented in Seila Law . While the Ninth Circuit and DC Circuit had held that

6042-455: The U.S. As of May 2010, there were 493,815 active HECM loans. As of 2006, the number of HECM mortgages that HUD is authorized to insure under the reverse mortgage law was capped at 275,000. However, through the annual appropriations acts, Congress has temporarily extended HUD's authority to insure HECMs notwithstanding the statutory limits. Program growth in recent years has been very rapid. In fiscal year 2001, 7,781 HECM loans were originated. By

6148-631: The U.S. population ages. In 2000, the Census Bureau estimated that 34 million of the country's 270 million residents were sixty-five years of age or older, while projecting the two totals to rise to 62 and 337 million, respectively, in 2025. In addition, the Center For Retirement Research at Boston College estimates that more than half of retirees “may be unable to maintain their standard of living in retirement.”. The low adoption rates can be partially explained by dysfunctional aspects of

6254-459: The United States, the FHA -insured HECM (home equity conversion mortgage), a.k.a. reverse mortgage, is a non-recourse loan. In simple terms, the borrowers are not responsible to repay any loan balance that exceeds the net-sales proceeds of their home. For example, if the last borrower left the home and the loan balance on their FHA-insured reverse mortgage was $ 125,000, and the home sold for $ 100,000, neither

6360-415: The United States. Since its founding, the CFPB has used technology tools to monitor how financial entities used social media and algorithms to target consumers. The agency was originally proposed in 2007 by Elizabeth Warren while she was a law professor. The CFPB's creation was authorized by the Dodd–Frank Wall Street Reform and Consumer Protection Act , whose passage in 2010 was a legislative response to

6466-400: The agency's methodology means it can only guess who may be victims of discrimination entitled to settlement funds, as of late 2015, the CFPB had yet to compensate any individuals who were victims of Ally's allegedly discriminatory practices. In 2016, the House voted to overturn its 2013 guidance, with 88 Democrats joining House Republicans. Cordray was accused but cleared of any violations of

SECTION 60

#1732880496574

6572-483: The agency. However, Cordray's nomination was immediately in jeopardy due to 44 Senate Republicans vowing to derail any nominee in order to encourage a decentralized structure of the organization. Senate Republicans had also shown a pattern of refusing to consider regulatory agency nominees. The CFPB formally began operation on July 21, 2011. Since the CFPB database was established in 2011, more than four million complaints have been published. CFPB supporters include

6678-564: The amount of proceeds that can be distributed within the first year of the loan. Because many borrowers were taking full draw lump sums (often at the encouragement of lenders) at closing and burning through the money quickly, HUD sought to protect borrowers and the viability of the HECM program by limiting the amount of proceeds that can be accessed within the first 12 months of the loan. If the total mandatory obligations (which includes existing mortgage balances, all closing costs, delinquent federal debts, and purchase transaction costs) to be paid by

6784-566: The appointment is seven years. OSFI's mandate is to protect depositors, policyholders, financial institution creditors and pension plan members, while allowing financial institutions to compete and take reasonable risks. The Office of the Chief Actuary, an independent unit operating within OSFI, provides a range of actuarial valuation and advisory services to the Government of Canada. The OSFI sets

6890-535: The appointment of Warren as Assistant to the President and Special Advisor to the Secretary of the Treasury on the Consumer Financial Protection Bureau to set up the new agency. Due to the way the legislation creating the bureau was written, until the first director was in place, the agency was not able to write new rules or supervise financial institutions other than banks. Elizabeth Warren, who proposed and established

6996-551: The attention of superiors. House Republicans criticized the methodology the CFPB uses to identify instances of racial discrimination among auto lenders. Because of legal constraints, the agency used a system to "guess" the race of auto loan applicants based on their last name and listed address. Based on that information, the agency charged several lenders were discriminating against minority applicants and levied large fines and settlements against those companies. Ally Financial paid $ 98 million in fines and settlement fees in 2013. As

7102-411: The balance of the loan (for example, $ 12 per month), which compounds with the principal. The best products have no monthly fees. The money from a reverse mortgage can be distributed in several different ways: The borrower remains entirely responsible for the property. This includes physical maintenance. In addition, some programs require periodic reassessments of the value of the property. Income from

7208-412: The balance of the loan exceeds the proceeds of sale of the property, no claim for this excess will be made against the estate or other beneficiaries of the borrower. On 18 September 2012, the government introduced statutory 'negative equity protection' on all new reverse mortgage contracts. This means the borrower cannot end up owing the lender more than their home is worth (the market value or equity). In

7314-458: The borrower nor their heirs would be responsible for the $ 25,000 on the reverse mortgage loan that exceeded the value of their home. The extra $ 25,000 would be paid from the FHA insurance that was purchased when the HECM loan was originated. A reverse mortgage cannot go upside down. The cost of the FHA mortgage insurance is a one-time fee of 2% of the appraised value of the home, and an annual fee of 0.5% of

7420-503: The circuit judges from the earlier panel wrote separate dissents. In June 2018, New York Federal District Court judge Loretta Preska ruled against its structure. In January 2019, the Supreme Court denied review of the DC Circuit Court decision. In October 2019, the Supreme Court announced it would review the constitutionality of the Bureau's structure in the case Seila Law v. Consumer Financial Protection Bureau considering

7526-520: The constitutionality of the CFPB. The CFPB brought a motion to enforce the CID to the United States District Court for the Central District of California , where District Judge Josephine Staton granted the motion after finding the CFPB was constitutionally structured. Seila Law's appeal to the Ninth Circuit was dismissed. The 9th Circuit panel affirmed the District Court's ruling, and agreed that

7632-482: The cost of attending specific universities based on the financial aid offers a student has received. In 2014, the CFPB attempted to help consumers understand the risks of cryptocurrencies . However their guidance contained several factual errors, and did not factor in the many positive benefits of cryptocurrencies like Bitcoin, such as hedging against inflation, or censorship resistance. The CFPB guidance claimed that cryptocurrencies are "generally untraceable." This

7738-462: The dissent joined by Justices Ruth Bader Ginsburg , Stephen Breyer , and Sonia Sotomayor . Kagan wrote that "Today's decision wipes out a feature of that agency its creators thought fundamental to its mission—a measure of independence from political pressure." Kagan challenged the separation of powers argument presented by the majority: "Nowhere does the text [of the Constitution] say anything about

7844-513: The eligibility requirements in Mortgagee Letter 2014-07. Under the new guidelines, spouses who are younger than age 62 at the time of origination retain the protections offered by the HECM program if the older spouse who got the mortgage dies. This means that the surviving spouse can remain living in the home without having to repay the reverse mortgage balance as long as he or she keeps up with property taxes and homeowner's insurance and maintains

7950-515: The end of 2013. This was a highly controversial move as the Senate was still holding pro forma sessions, and the possibility existed that the appointment could be challenged in court. This type of recess appointment was unanimously ruled unconstitutional in NLRB v. Noel Canning . On July 16, 2013, the Senate confirmed Cordray as director in a 66–34 vote. Cordray resigned in late 2017 to run for governor of Ohio. The Financial CHOICE Act , proposed by

8056-506: The financial system. Mid-1980s – increased international competition and the failure of two Canadian banks and the subsequent enquiry into these failures by the Honourable Willard Z. Estey highlighted the need to ensure a sound approach to handling the risks associated with the financial marketplace. July 1987 – to ensure a coordinated approach to supervision and a modern regulatory framework for Canada's financial system, and acting on

8162-476: The fiscal year ending in September 2008, the annual volume of HECM loans topped 112,000 representing a 1,300% increase in six years. For the fiscal year ending September 2011, loan volume had contracted in the wake of the financial crisis, but remained at over 73,000 loans that were originated and insured through the HECM program. Since the HECM program was created analysts have expected loan volume to grow further as

8268-401: The government due to the nature of the product. The cost of getting a reverse mortgage from a private sector lender may exceed the costs of other types of mortgage or equity conversion loans. Exact costs depend on the particular reverse mortgage program the borrower acquires and vary from lender to lender. Depending on the program, there may be other costs. Money received in a reverse mortgage

8374-409: The home for a period greater than 12 months. The loan may also become due and payable if the borrower fails to pay property taxes or homeowners insurance, lets the condition of the home significantly deteriorate, or transfers the title of the property to a non-borrower (excluding trusts that meet HUD's requirements). Home Equity Conversion Mortgages account for 90% of all reverse mortgages originated in

8480-456: The home permanently. This includes when they sell the home or die. However, most reverse mortgages are owner-occupier loans only so that the borrower is not allowed to rent the property to a long-term tenant and move out. A borrower should check this if he thinks he wants to rent his property and move somewhere else. A common misconception is that when the borrower dies or leaves the home (e.g., goes to an aged-care facility or moves somewhere else)

8586-587: The home to a reasonable level. For a reverse mortgage to be a viable financial option, existing mortgage balances usually must be low enough to be paid off with the reverse mortgage proceeds. However, borrowers do have the option of paying down their existing mortgage balance to qualify for a HECM reverse mortgage. The HECM reverse mortgage follows the standard FHA eligibility requirements for property type, meaning most 1–4 family dwellings, FHA-approved condominiums, and PUDs qualify. Manufactured homes also qualify as long as they meet FHA standards. Before starting

8692-410: The house must be sold. This is not the case; the loan must be repaid. Thus, the beneficiaries of the estate may decide to repay the reverse mortgage from other sources, sale of other assets, or even refinancing to a normal mortgage or, if they qualify, another reverse mortgage. Prepayment of the loan—when the borrower pays the loan back before it reaches term—may incur penalties, depending on

8798-439: The hundreds and thousands of consumer complaints about their financial services—including banks and credit card issuers—were received and compiled by CFPB and are publicly available on a federal government database. Once a financial institution acquires $ 10   billion in assets , it falls under the guidance, rules, and regulations under the CFPB. The bank will then be known as a CFPB regulated bank. The CFPB will examine

8904-971: The institution for compliance with bank regulatory laws. The regulations implemented by the Bureau are housed in Chapter X of Title XII Banks and Banking of the U.S. Code of Federal Regulations . Some notable examples include the ECOA ( Equal Credit Opportunity Act - Regulation B), HMDA ( Home Mortgage Disclosure Act - Regulation C), Alternative Mortgage Transaction Parity Act of 1982 (Regulation D), EFTA ( Electronic Fund Transfer Act - Regulation E), FDCPA ( Fair Debt Collection Practices Act - Regulation F), FCRA ( Fair Credit Reporting Act - Regulation V), RESPA ( Real Estate Settlement Procedures Act - Regulation X), TILA ( Truth in Lending Act - Regulation Z), and Truth in Savings Act (Regulation DD). In July 2010, Congress passed

9010-444: The keys to the director's office on November 27 and ordered all CFPB employees to disregard any claims from English that she is the acting director. Both English and Mulvaney sent emails to the entire 1,600-person staff of the CFPB, each signing as "Acting Director" of the agency. On November 28, 2017, U.S. District Judge Timothy J. Kelly , who had been appointed by President Trump just a few months earlier, denied English's motion for

9116-589: The law was "a threat to individual liberty" and instead found that the president could remove the CFPB director at will. Circuit Judge Karen L. Henderson agreed that the CFPB Director had been wrong in adopting a new interpretation of the Real Estate Settlement Procedures Act , finding the statute of limitations did not apply to the CFPB, and fining the petitioning mortgage company PHH Corporation $ 109 million, but she dissented from giving

9222-431: The loan process for an FHA/HUD-approved reverse mortgage, applicants must take an approved counseling course. An approved counselor should help explain how reverse mortgages work, the financial and tax implications of taking out a reverse mortgage, payment options, and costs associated with a reverse mortgage. The counseling is meant to protect borrowers, although the quality of counseling has been criticized by groups such as

9328-468: The loan. An additional fee could also be imposed in the event of a redraw. Under the National Credit Code, penalties for early repayment are illegal on new loans since September 2012; however, a bank may charge a reasonable administration fee for preparation of the discharge of mortgage. All reverse mortgages written since September 2012 must have a "No Negative Equity Guarantee". This means that if

9434-611: The maximum claim amount (MCA), the age of the youngest borrower, the expected interest rate (EIR), and a table to PL factors published by HUD. Similar to loan-to-value (LTV) in the forward mortgage world, the principal limit is essentially the percentage of the value of the home that can be lent under the FHA HECM guidelines. Most PLs are typically in the range of 50% to 60% of the MCA, but they can sometimes be higher or lower. The table below gives examples of principal limits for various ages and EIRs and

9540-406: The money is kept in an account (savings, checking, etc.) past the end of the calendar month in which it is received; the borrower could lose eligibility for such public programs if total liquid assets (cash, generally) is then greater than those programs allow. The HECM reverse mortgage is not due and payable until the last borrower (or non-borrowing spouse) dies, sells the house, or fails to live in

9646-419: The opportunity to purchase a new principal residence with HECM loan proceeds — the so-called HECM for Purchase program, effective January 2009. The "HECM for Purchase" applies if "the borrower is able to pay the difference between the HECM and the sales price and closing costs for the property. The program was designed to allow the elderly to purchase a new principal residence and obtain a reverse mortgage within

9752-511: The outstanding loan balance. According to a 2015 article in the Journal of Urban Economics , about 12% of the United States HECM reverse mortgage borrowers defaulted on "their property taxes or homeowners insurance"—a "relatively high default rate". However, the data was derived from participants during 2006–2011 and compared them to homeowners with forward mortgages and not homeowners without

9858-411: The position of deputy director, and announced that he would leave office at the close of business that day. Cordray indicated that would make English the acting director after his resignation, citing provisions of the Dodd–Frank Wall Street Reform and Consumer Protection Act providing that the deputy director of the CFPB becomes acting director in the "absence or unavailability" of the director. Later

9964-517: The president a new power to remove the director, citing constitutional avoidance . The U.S. Court of Appeals for the District of Columbia Circuit vacated the decision and ordered en banc review. On January 31, 2018, the en banc D.C. Circuit found that the CFPB's structure was constitutional by a vote of 7–3. Judge Cornelia Pillard , writing for the majority, found that the Take Care Clause does not forbid independent agencies , while each of

10070-492: The privacy and security of consumers data. In 2024, the Bureau limited credit card late fees to $ 8. The rule was blocked by a judge, but the reason given for the block was overturned by the Supreme Court giving the Bureau confidence that the rule will be implemented. A 2013 press release from the United States House Financial Services Committee criticized the CFPB for what was described as

10176-502: The property sells for more than the amount owed to the lender, the borrower or his estate will receive the extra funds. According to the October 2018 filings of the Office of the Superintendent of Financial Institutions (OSFI), an independent federal agency reporting to the Minister of Finance in that month, the outstanding reverse mortgage debt for Canadians soared to $ CDN3.42 billion, setting

10282-489: The purpose of the database just to name and shame companies? Or should they have a disclaimer on there that says it's a fact-free zone, or this is fake news? That's really what I see happening here." Bill Himpler, executive vice president of the American Financial Services Association , a trade group representing banks and other lenders responded "Something needs to be done." "Once the damage is done to

10388-759: The recommendations of the Estey commission, the government proclaimed the Financial Institutions and Deposit Insurance Amendment Act and the Office of the Superintendent of Financial Institutions Act. This latter Act joined the Department of Insurance and the Office of the Inspector General of Banks to form OSFI, which was given the powers to supervise and regulate all federally regulated financial institutions. May 1996 – Bill C-15 receives Royal Assent. This new legislation clarifies OSFI's prime responsibilities as helping to minimize losses to depositors, policy holders, and pension plan members and to maintain public confidence in

10494-464: The reverse mortgage are less than 60% of the principal limit, then the borrower can draw additional proceeds up to 60% of the principal limit in the first 12 months. Any remaining available proceeds can be accessed after 12 months. If the total mandatory obligations exceed 60% of the principal limit, then the borrower can draw an additional 10% of the principal limit if available. The Housing and Economic Recovery Act of 2008 provided HECM mortgagors with

10600-434: The reverse mortgage include: The interest rate on the reverse mortgage varies. Some programs used to offer fixed rate loans , while others offer variable rate loans. Since the update of the National Consumer Credit Protection Act in September 2012, new reverse mortgage loans are not allowed to have fixed rates. In addition, there may be costs during the life of the reverse mortgage. A monthly service charge may be applied to

10706-624: The reverse mortgage market, including high markups, complexity of the product, consumer distrust of reverse mortgage lenders, and lack of pricing transparency. Consumer Financial Protection Bureau The Consumer Financial Protection Bureau ( CFPB ) is an independent agency of the United States government responsible for consumer protection in the financial sector . CFPB's jurisdiction includes banks , credit unions , securities firms, payday lenders , mortgage-servicing operations, foreclosure relief services, debt collectors , for-profit colleges, and other financial companies operating in

10812-474: The same day, however, President Donald Trump appointed the incumbent director of the Office of Management and Budget , Mick Mulvaney , as acting director, citing the authority of the Federal Vacancies Reform Act of 1998 . On November 25, the Office of Legal Counsel released an opinion, written by Assistant Attorney General Steven Engel , asserting that the President has the authority under

10918-411: The split decision of the lower courts. Oral arguments began on March 3, 2020. On June 29, 2020, the Supreme Court ruled in a 5–4 decision that the firing protections of the director are an unconstitutional restraint on the president's ability to oversee executive branch agencies. "Such an agency lacks a foundation in historical practice and clashes with constitutional structure by concentrating power in

11024-430: The spouse who was 62 or older. If the older spouse died, the reverse mortgage balance became due and payable if the younger surviving spouse was left off of the HECM loan. If this younger spouse was unable to pay off or refinance the reverse mortgage balance, he or she was forced either to sell the home or lose it to foreclosure. This often created a significant hardship for spouses of deceased HECM mortgagors, so FHA revised

11130-414: The states that later joined the lawsuit, had standing to challenge the law, and returned the case for further proceedings. A lawsuit filed July 22, 2013, by Morgan Drexen Integrated Systems, a provider of outsourced administrative support services to attorneys, and Connecticut attorney Kimberly A. Pisinski, challenged the constitutionality of the CFPB. The complaint, filed in the U.S. District Court for

11236-467: Was also supported by the General Counsel of the CFPB, Mary E. McLeod. On November 26, English (represented by former CFPB Senior Counsel Deepak Gupta ) filed a lawsuit in the United States District Court for the District of Columbia seeking a temporary restraining order and declaratory judgment to prevent Mulvaney from becoming acting director, Mulvaney was given access by unnamed individuals with

#573426