Wall Street Reform Bill Brings New Reverse Mortgage Oversight

A House-Senate conference committee early this morning gave final approval to sweeping financial services reform legislation, sending the bill back to the House and Senate and setting the stage for signature into law by President Obama before July 4th.

Lawmakers are calling the bill the Dodd-Frank Act after the two main architects, Senate Banking Committee Chairman Christopher J. Dodd (D-Conn.) and House Financial Services Committee Chairman Barney Frank (D-Mass.).  The final version of the bill incorporates the reverse mortgage amendment which was included as part of the House’s offer earlier this week.

“I am pleased that the Wall Street reform legislation includes an important provision that I have been fighting for that regulates reverse mortgages so that our nation’s seniors are not exposed to unfair and deceptive practices,” said Representative Dina Titus (D-Nev), the sponsor of the House amendment in an email to RMD.  “This effort will help ensure that seniors in their golden years do not lose their home and equity they have built up through a lifetime of hard work.”

The bill creates a Consumer Financial Protection Bureau which has the independent authority to write and enforce rules about consumer lending in mortgages, credit cards and other financial products.

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Housed in the Federal Reserve, the bureau is required to conduct a study on reverse mortgages to determine any deceptive or abusive practices within one year.  The study would also determine whether suitability standards are necessary, as well as safeguards to protect consumers from being sold reverse mortgages to fund inappropriate annuities, investments and other financial products.

The bureau also has the authority to issue regulations, orders, or guidance that apply to reverse mortgages prior to the completion of the study.

The final bill now travels to separate House and Senate votes and then, upon passage by Congress, to a Presidential signature into law.