Banking Regulators to Start Collecting Reverse Mortgage Data

The Office of Thrift Supervision within the Department of the Treasury is soliciting comments on a proposed new schedule for Annual Supplemental Consolidated Data on Reverse Mortgages for its Thrift Financial Report (TFR).

With the volume of reverse mortgage activity expected to dramatically increase, the agencies said they need to collect information from financial institutions involved in the reverse mortgage activities to monitor and mitigate risks.

Specifically, the OTS sounds more concerned with proprietary products:

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For example, proprietary reverse mortgages structured as lines of credit, which are not insured by the federal government, expose borrowers to the risk that the lender will be unwilling or unable to meet its obligation to make payments due to the borrower. Additionally, in those circumstances in which housing prices are declining, there is the risk that the reverse mortgage loan balance may exceed the value of the underlying collateral value of the home.

The U.S. Department of Housing and Urban Development provides a monthly report for reverse mortgages endorsed for federal insurance, by fiscal year, for those loans that are part of the federally sponsored HECM program.

While this monthly report provides information such as average expected interest rates, average property values, average age of the borrower, and the number of active insured accounts, there is no aggregate monthly data nor is there institution-specific information that identifies the institutions participating in the program.

For proprietary reverse mortgage loans, there is no known data on the volume of reverse mortgages, dollar amounts outstanding, or the institutions offering these products.

Therefore, OTS is proposing that a new Schedule RM—Annual Supplemental Consolidated Data on Reverse Mortgages be added to the TFR to collect reverse mortgage data on an annual basis beginning on December 31, 2010.

The other federal banking agencies are similarly proposing new items for the Call Report to collect reverse mortgage data on an annual basis beginning on December 31, 2010.

Collecting this information will provide the agencies the necessary information for policy development and the management of risk exposures posed by institutions’ involvement with reverse mortgages.

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  • Here is what NPR had to say both about OTS and our friends over at the Office of the Comptroller of the Currency under Mr. Dugan in a segment titled, “Plenty of Blame to Go Around” on June 8, 2009, which can be found at http://www.npr.org/blogs/money/2009/06/dont_for… :

    “Financial regulation is one of those things where the more you dig, the foggier the picture becomes. There are so many layers and it's really hard to separate the multiple moving parts.

    The Office of Thrift Supervision stood out for a number of reasons, one biggie being that they regulated some of the largest failures of this crisis. Michael Roster, the regulation lawyer at the end of our story, had something to add this morning. He says that when you see the list of failures, yes, the OTS looks pretty bad. But imagine if all those “too big to fail” institutions were allowed to fail, instead of getting bailed out:

    'When looking at which regulatory agencies had failed banks under them, we should remember that the larger U.S. banks and holding companies are regulated by the Fed and the Office of the Comptroller of the Currency (OCC) and, unlike entities under the OTS, were deemed too big to fail and thus were bailed out instead of being closed. But for that, I think you'd find the score is pretty even among all the agencies and, if anything, many of the larger failures in dollar amounts and number of entities are at these other agencies. Ironically, the Fed and the OCC have been vigorous advocates for the Basel II economic models, which would have reduced capital even further.'

    There's a cool list of failed banks here (scroll down and you can sort by regulator). As for the banks that have been propped up?”

    So is the idea, OTS and OCC learned their lessons and are now ready to tackle our the really big job — our dinky industry? Talk about overkill….

  • Here is what NPR had to say both about OTS and our friends over at the Office of the Comptroller of the Currency under Mr. Dugan in a segment titled, u201cPlenty of Blame to Go Aroundu201d on June 8, 2009, which can be found at rnrnhttp://www.npr.org/blogs/money/2009/06/dont_forget_the_other_regulato.html :rnrn”Financial regulation is one of those things where the more you dig, the foggier the picture becomes. There are so many layers and it’s really hard to separate the multiple moving parts. rnrnThe Office of Thrift Supervision stood out for a number of reasons, one biggie being that they regulated some of the largest failures of this crisis. Michael Roster, the regulation lawyer at the end of our story, had something to add this morning. He says that when you see the list of failures, yes, the OTS looks pretty bad. But imagine if all those “too big to fail” institutions were allowed to fail, instead of getting bailed out:rnrn’When looking at which regulatory agencies had failed banks under them, we should remember that the larger U.S. banks and holding companies are regulated by the Fed and the Office of the Comptroller of the Currency (OCC) and, unlike entities under the OTS, were deemed too big to fail and thus were bailed out instead of being closed. But for that, I think you’d find the score is pretty even among all the agencies and, if anything, many of the larger failures in dollar amounts and number of entities are at these other agencies. Ironically, the Fed and the OCC have been vigorous advocates for the Basel II economic models, which would have reduced capital even further.’ rnrnThere’s a cool list of failed banks here (scroll down and you can sort by regulator). As for the banks that have been propped up?”rnrnSo is the idea, OTS and OCC learned their lessons and are now ready to tackle a REALLY big job — our dinky industry? Talk about overkill…. This is like Goliath and his brothers taking on David by himself.

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