The Mortgage Bankers Association sent a letter to the Federal Financial Institutions Examination Council (FFIEC), saying it supports efforts by the agency to provide supervisory action to lenders on reverse mortgage products.
Late last year, the FFIEC issued proposed guidelines for institutions to manage compliance and reputation risks associated with reverse mortgage products.
According to MBA Newslink:
“MBA supports supervisory action to provide guidance to lenders on reverse mortgage consumer protections and reputation risk management,” the letter said. “MBA recognizes that reverse mortgages are relatively new and complex financial products designed to provide assistance to a uniquely vulnerable consumer population. For these reasons, MBA believes all reverse mortgages should be accompanied by strong consumer protections.”
he FFIEC in December proposed guidance for managing compliance and reputation risks in connection with reverse mortgage products Upon final completion of the guidance, the federal financial institution regulatory agencies will issue supervisory guidance to the institutions that they supervise and the State Liaison Committee of the FFIEC will encourage state regulators to adopt the guidance.
The proposed guidance discusses the general features of, certain legal provisions applicable to and consumer protection concerns raised by reverse mortgage products. In addition, it focuses on the need to provide adequate information to consumers about reverse mortgage products; to provide qualified independent counseling to consumers considering these products; and to avoid potential conflicts of interest. The proposed guidance also addresses related policies, procedures and internal controls and third-party risk management.
“MBA believes lenders that offer reverse mortgages, whether they are [HUD] Home Equity Conversion Mortgages or proprietary products, should abide by high standards of quality in order to enhance and protect their reputation and the reputation of the entire industry,” MBA said.
This includes following the HECM program requirements as an industry standard as they relate to areas including, but not limited to, mandatory counseling, disclosures and restrictions on cross-selling.”
The MBA provided RMD with a copy of the actual letter too. You can read a copy here.