A group of trade associations are requesting the Federal Reserve Board delay its regulatory changes that would prohibit deceptive advertising and improve disclosure of reverse mortgage information until later in 2011.
The National Reverse Mortgage Lenders Association, Mortgage Bankers Association, and the American Bankers Association said that while they generally support the proposal, given other legislative and regulatory initiatives currently underway by companies to comply with the Dodd-Frank Wall Street Reform and Consumer Protection Act, the industry would need at least 12 months to fully implement what is being proposed.
“The Board should consider recent requirements included under the Dodd-Frank Wall Street Reform and Consumer Protection Act and how future studies and rule-making required thereunder will affect the broader mortgage industry as a whole, and specifically the reverse mortgage industry,” said the letter.
The groups request a final rule based on the Fed’s proposal not be published prior to April 1, 2011, and does not expect a mandatory compliance date with respect to any such final rule on or before October 1, 2011.
The Fed’s proposal would eliminate the Total Annual Loan Cost (TALC) and implement new consumer disclosures that are more easily comprehensible and user-friendly, as well as adopt new guidelines around marketing and advertising, counseling and cross-selling. “We generally support the Board’s goals with respect to reverse mortgages as contained in the Proposed Rule, and share the Board’s goal of providing borrowers with accurate and straightforward information to facilitate informed decisions,” said the letter.
Consumer groups like AARP have also requested the Fed withdraw its proposal because they feel it would undermine existing consumer protections and break with Congressional intent and exceed the authority given to the Board. The Center for Responsible Lending claims the proposed rule encourages predatory lending.
To view a copy of the letter, see here.