MBA Supports Federal Regulators Guidance for Reverse Mortgages

image 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:

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“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.

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  • The MBA seems to be stepping it up and getting out ahead of some industry issues.

    Where is NRMLA on all of this? Oh yeah, I forgot…they are still evaluating PR campaigns.

  • NRMLA's Executive Committee, Board and counsel have provided specific comments to the FFIEC as requested. We find the way to be most effective with the regulatory agencies is not to publicize your exchanges, but rather to carry on a comprehensive dialogue. Results are more valuable to our membership than attention.

    • Marty,

      Sometimes, paying a little attention to the cries of delegates would help, especially, when they do not harm potential negotiations. Our members and delegates are being pushed and pulled by the actions of the White House, Congress, the regulators, and state governments. Sometimes it feels like we are all alone out here.

      A few well publized actions by NRMLA would go a long way.

  • NRMLA’s Executive Committee, Board and counsel have provided specific comments to the FFIEC as requested. We find the way to be most effective with the regulatory agencies is not to publicize your exchanges, but rather to carry on a comprehensive dialogue. Results are more valuable to our membership than attention.

  • Marty, I could not disagree with you more and I am insulted by your response. I think your response is a clear indicator of why the membership is so frustrated with its leadership. Why should we just blindly follow the “trust us, we know better” philosopohy you espouse? Why doesn't the leadership of NRMLA inform its members what it is doing versus saying things like “results are more valuable …than attention”. That's a crock!

    We can think for ourselves and believe me, we appreciate it when a trade association speaks out on behalf of its members. I for one, was thrilled to see the MBA get “ahead of the story” and hell, their reverse mortgage division is still just sputtering along.

    NRMLA takes our dues and our conference fees, so as far as I am concerned, the least you could do is keep us informed rather than chastising us for wishing you would publicly come to our defense.

  • Reversemaniac (and all RMD readers),

    A couple of thoughts to your post. First, no one is “ahead” of the issue. By definition, a comment letter is a response to request for comments by a regulator, in this case, the FFIEC.

    NRMLA's process of producing/submitting its comment letter included hours of conference calls, drafting/editing language, and approval by its Board of Directors.

    Most importantly, it communicated to the membership (and I do not know if your firm is a NRMLA member) in two distinct ways: 1) It communicated thru its Monday Report dated February 16th and 2) NRMLA published both the Proposed Guidance from the FFIEC and NRMLA's comment letter on the member's only sction of its web-site.

    I hope that you and all other RMD readers who are NRMLA members please use the tools afforded to you as members before mis-stating facts.

  • Marty, I could not disagree with you more and I am insulted by your response. I think your response is a clear indicator of why the membership is so frustrated with its leadership. Why should we just blindly follow the “trust us, we know better” philosopohy you espouse? Why doesn’t the leadership of NRMLA inform its members what it is doing versus saying things like “results are more valuable …than attention”. That’s a crock!rnrnWe can think for ourselves and believe me, we appreciate it when a trade association speaks out on behalf of its members. I for one, was thrilled to see the MBA get “ahead of the story” and hell, their reverse mortgage division is still just sputtering along.rnrnNRMLA takes our dues and our conference fees, so as far as I am concerned, the least you could do is keep us informed rather than chastising us for wishing you would publicly come to our defense.

  • Reversemaniac (and all RMD readers),rnrnA couple of thoughts to your post. First, no one is “ahead” of the issue. By definition, a comment letter is a response to request for comments by a regulator, in this case, the FFIEC.rnrnNRMLA’s process of producing/submitting its comment letter included hours of conference calls, drafting/editing language, and approval by its Board of Directors. rnrnMost importantly, it communicated to the membership (and I do not know if your firm is a NRMLA member) in two distinct ways: 1) It communicated thru its Monday Report dated February 16th and 2) NRMLA published both the Proposed Guidance from the FFIEC and NRMLA’s comment letter on the member’s only sction of its web-site.rnrnI hope that you and all other RMD readers who are NRMLA members please use the tools afforded to you as members before mis-stating facts.rn

  • I stand corrected that NRMLA did inform its members of its comments as I missed the Monday report that happened to come out on Tuesday. My apologies.

    That said, the stark difference between NRMLA and the MBA is that the MBA went public with its support and suggestions. As a dues-paying member of NRMLA I would be thrilled to see NRMLA make similar public, supportive-of-the-industry, announcements.

  • I am not so sure the position that the MBA has taken is all that supportive of the industry. Is more regulation actually needed? This becomes a particularly difficult issue when one reads what lawmakers propose in state bills and sees how prosecutors describe our products.

    It is not that less regulation is needed but rather that enforcement take place. One church father is alleged to have remarked when a young disciple came to him bragging that he had just quoted the entire Bible from memory over a period of months to his superiors: “My son you have just added many words to the air.” That is exactly how I feel about more regulation and more new laws. If they are not going to be enforced with some vigor and “teeth” then the authors have just “added many words” to wasted sheets of paper. Much of California AB 329 is exactly that way.

    Regulators hardly need encouragement to write regulations. What I fear from the MBA is that they might write more worthless and potentially harmful recommendations as found in their state model bill.

  • I stand corrected that NRMLA did inform its members of its comments as I missed the Monday report that happened to come out on Tuesday. My apologies.rnrnThat said, the stark difference between NRMLA and the MBA is that the MBA went public with its support and suggestions. As a dues-paying member of NRMLA I would be thrilled to see NRMLA make similar public, supportive-of-the-industry, announcements. rnrn

  • I am not so sure the position that the MBA has taken is all that supportive of the industry. Is more regulation actually needed? This becomes a particularly difficult issue when one reads what lawmakers propose in state bills and sees how prosecutors describe our products.rnrnIt is not that less regulation is needed but rather that enforcement take place. One church father is alleged to have remarked when a young disciple came to him bragging that he had just quoted the entire Bible from memory over a period of months to his superiors: “My son you have just added many words to the air.” That is exactly how I feel about more regulation and more new laws. If they are not going to be enforced with some vigor and “teeth” then the authors have just “added many words” to wasted sheets of paper. Much of California AB 329 is exactly that way.rnrnRegulators hardly need encouragement to write regulations. What I fear from the MBA is that they might write more worthless and potentially harmful recommendations as found in their state model bill.

  • Marty,rnrnSometimes, paying a little attention to the cries of delegates would help, especially, when they do not harm potential negotiations. Our members and delegates are being pushed and pulled by the actions of the White House, Congress, the regulators, and state governments. Sometimes it feels like we are all alone out here.rnrnA few well publized actions by NRMLA would go a long way.

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