Website compliance can be a difficult landscape to navigate with the changing state of regulations as well as the federal and state rules that may not be consistent across the board. A webinar panel hosted Thursday by Reverse Fortunes sought the input of regulatory experts in the reverse mortgage industry on how lenders and originators can keep up with compliance. Above all, they said, treat your website like any other form of advertising—be consistent, avoid broad statements and keep documents in the events of a regulator exam.
The rules apply regardless of medium, says James Milano, counsel, Weiner Brodsky Sidman Kider PC, who advises caution when it comes to the distinction between a transactional website and a promotional website.
“Be cautious of transactional websites,” Milano says—those where a senior can submit information or apply for a loan. “There are additional security concerns and rules there,” he says.
From a licensing standpoint, it’s important to list all licensing including state information, the panelists said. While in the past there may have been some grey area with regard to the rules of compliance online, “What was once grey is quickly becoming black and white,” said Milano.
Under the Truth in Lending Act there are certain “trigger” terms that require additional disclosures, such as “rate” and “payment information.” Those may require some additional review. And when it comes to state regulations, state by state, rules vary. In Massachusetts, for example, additional licensing is required for generating leads, beyond the origination requirements for website compliance.
“Most states define ‘advertisement’ broadly and are likely to consider a website advertising,” Milano says. “We think the prudent approach is to treat your website as an advertisement and make sure it adheres to state regulations.”
Be careful about broad statements, especially superlatives, the panelists say. “Stay in your home forever,” is a promise to avoid. As is “no mortgage payment ever.” Technically, there is a payment obligation when the loan becomes due and payable, so “no payment ever” is not entirely true.
Further, lenders may look to adjust language surrounding income and credit requirements. In the past, “guaranteed no income or credit requirements,” may have been true. “It’s going to be an issue going forward,” says Bill Trask, senior vice president and chief counsel for Security One Lending, referencing underwriting changes that the National Reverse Mortgage Lenders Association encouraged last week. “Even though we are calling it underwriting ‘light,’ we are going to look at those qualifications.” Company names and online branding should be consistent across branches, Trask says. Those kinds of differences are something that regulators may tune into, he says.
Finally, record keeping becomes paramount for any web inspection. “Sometimes you have a very short time to deal with this,” says Trask. “Keep copies. You need to be prepared beforehand.” While websites can be very dynamic, the best way to keep a record is to print out the pages and date them, the panel said.
Written by Elizabeth Ecker