The Federal Trade Commission has filed comments in support of the Federal Financial Institutions Examination Council’s (FFIEC) proposed guidelines designed to protect consumers from deceptive claims and to help them make better-informed decisions about whether to obtain a reverse mortgage.
“FTC staff believes that the Proposed Guidance addresses important issues related to reverse mortgages and does so at a critical juncture,” said the agency in its comments. “Reverse mortgage products have become more prevalent in recent years, and during an economic downturn even more elderly consumers may seek to use such products to obtain funds they sorely need.”
At the end of 2009, the FFIEC issued proposed guidance for its members on how to deal with reverse mortgages. FFIEC members include the federal banking agencies – Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Office of Thrift Supervision, National Credit Union Administration – and the State Liaison Committee, which includes representatives from the Conference of State Bank Supervisors, American Council of State Savings Supervisors, and National Association of State Credit Union Supervisors.
According to the FTC, it specifically supports the FFIEC’s efforts to advise lenders of the importance of not making deceptive claims for reverse mortgages and to provide them with concrete guidance as to the circumstances under which claims may be deceptive in violation of Section 5 of the FTC Act. The comments also encourage reverse mortgage lenders and brokers under the FTC’s jurisdiction to review and consider the proposed guidance’s advice and examples relating to deceptive claims. The comments further note the value of testing disclosures and other measures in certain circumstances to confirm that they are clear and useful and do not create unintended consequences.
Included in the comments were details about the FTC’s activities related to reverse mortgages. According to the FTC, it has an active law enforcement program to assess and respond to problematic conduct in the reverse mortgage market. In addition to regularly monitoring complaints relating to reverse mortgages in its Consumer Sentinel database, FTC staff organized the Federal-State Reverse Mortgage Law Enforcement Working Group in the fall of 2008.
The purpose of the Working Group is to bring together federal and state law enforcement agencies to discuss issues and developments related to reverse mortgages. In addition, it’s intended to enhance coordination and cooperation among enforcement officials to enable them to respond quickly and effectively to unlawful activity related to reverse mortgages. The group has met and continues to meet on a regular basis said the FTC.
You can read the comments from the FTC here.