While the majority of reverse mortgages originated continue to be FHA insured HECMs, regulators and legislators are voicing concerns about the need for consumer safeguards for proprietary reverse mortgage products.
During a speech earlier this month, John Dugan of the Office of the Comptroller of the Currency said, “lenders are likely to develop more attractive proprietary products that will compete with HECMs and also become available for consumers who don’t qualify for HECMs.” He later added that regulators need to set more standards for proprietary reverse mortgages
Looking to define a national standard of consumer protections for proprietary products, the Mortgage Bankers Association is about to introduce model legislation to ensure that seniors are protected without having their choices limited due to legislation.
“When your doing FHA HECM’s you have rules, you have certain fee restrictions and practices that protect seniors,” said John Courson, President of the MBA, at the Mortgage Bankers Secondary Marketing Conference in Chicago. “We really need model legislation for proprietary reverse mortgages that we can take to the states and have it implemented.”
In an interview with RMD, Courson said the MBA’s Reverse Mortgage Task Force created model legislation that establishes a set of standards and best practices for proprietary reverse mortgage products. “The model legislation is finished and is in the process of being vetted through AARP, so they can give their input and then we will introduce it and work with the states,” said Courson.
According to the MBA’s spokesperson, the task force is leaning towards a release next week.