Senators Push to Preserve Reverse Mortgage Provisions in Wall Street Reform Bill

While members of the US Senate and House of Representatives meet to negotiate the final version of Wall Street reform legislation, Senators Claire McCaskill (D-MO) and Herb Kohl (D-WI) sent a letter to the members of the conference committee urging them to preserve language they feel will improve consumer protections and strengthen oversight of the reverse mortgage industry.

“We believe it is critically important to ensure that there are strong consumer protections in place so that seniors who do not need or want these expensive products will not be pressured into buying them,” the senators wrote in the letter.

Several weeks ago, McCaskill and Kohl introduced an amendment to the Wall Street reform legislation that would have required the new Consumer Financial Protection Bureau to issue a new rule to create standards for whether a reverse mortgage is suitable for seniors, prohibit misleading advertisements, and increase regulation and transparency of the reverse mortgage industry.

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The industry was not supportive of the amendment because it would’ve have eliminated the reverse mortgage as a possible solution for seniors at the very time they may need it the most said Peter Bell, Peter Bell, President of the National Reverse Mortgage Lenders Association.

While it never made it to the floor for debate, the bill that passed the House included an amendment meant to “oversee the reverse mortgage industry and ensure seniors are not exposed to unfair and deceptive practices,” said Congresswoman Dina Titus, one of the sponsors of the amendment in an statement earlier this year.

The amendment included in the House bill requires the Director of the Consumer Financial Protection Agency to issue regulations regarding reverse mortgage transactions within one year of the date of the enactment.  Additionally, the bill calls to clarify the director’s authority to consider additional protections regarding reverse mortgages under both consumer statues and HUD regulations.

The two Senators sent a letter the conferees to include the provision in the conference report, asking the conferees to “make clear that nothing in the bill is intended to limit or constrain the new consumer regulator’s authority to write rules or enforce consumer protections on reverse mortgages under other existing statutes which are not named explicitly in Section 4316 of the House-passed bill.”

McCaskill and Kohl emphasized that “stronger consumer protections in the reverse mortgages industry will help protect America’s seniors from predatory lending practices and ensure that America’s seniors are never pressured into purchasing exotic financial tools that aren’t suitable for them.”

You can read a copy of the letter sent to the conferees here.

 

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  • It seems Senator Kohl may have been more involved in the Amendment and its promotion than first believed. To say this is disappointing is to make a significant understatement.

    • I certainly agree with you. And I don't think calling it disappointing is being too “critic”al. I believe Sen. McCaskill said in her infamous committee meeting back in 2008 regarding reverse mortgages that we shouldn't throw the baby out with the bath water. Well, Senators McCaskill and Kohl, your actions are achieving exactly that. All of us who have through the years have done our best to exhibit ethical behavior in all our dealings with senior citizens from an industry which is becoming a walking corpse thanks to the current mood in Congress which has bailed out the banks and turned its back on a small HUD program which has the potential for helping so many seniors salute you for hurling the baby.

  • Unbelievable,read the letter and try to find any sort of objectivity. Apparently, no one has told Ms. McCaskill that it is already illegal for us to sell other products “alongside” reverse mortgages.

    • Michael,

      It is not illegal for us to sell other products alongside a reverse mortgage. It is illegal for the reverse mortgage originator who provided the reverse mortgage to do so. Why are you and so many other originators so upset?

      Why not just find an originator at a broker or lender which is not affiliated with the company you originate with and use that individual to provide the reverse mortgage while you provide the financial or insurance products — or you originate the reverse mortgage and find an investment or insurance salesperson to provide the investment? That seems a reasonable alternative. If not, why not?

      However, in some states like California it is illegal for the reverse mortgage originator to introduce the seller of the investment or insurance product before the period for rescission has ended. But then again why not provide the reverse mortgage and then immediately upon funding provide the investment?

      There are a lot of ways to “skin this cat” without breaking the law. Of course there may be some actual or potential loss of a commission.

  • Michael,rnrnIt is not illegal for us to sell other products alongside a reverse mortgage. It is illegal for the reverse mortgage originator who provided the reverse mortgage to do so. Why are you and so many other originators so upset?rnrnWhy not just find an originator at a broker or lender which is not affiliated with the company you originate with and use that individual to provide the reverse mortgage while you provide the financial or insurance products — or you originate the reverse mortgage and find an investment or insurance salesperson to provide the investment? That seems a reasonable alternative. If not, why not?rnrnHowever, in some states like California it is illegal for the reverse mortgage originator to introduce the seller of the investment or insurance product before the period for rescission has ended. But then again why not provide the reverse mortgage and then immediately upon funding provide the investment?rnrnThere are a lot of ways to “skin this cat” without breaking the law. Of course there may be some actual or potential loss of a commission.

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