New reverse mortgage disclosure forms are being drafted, representatives for the National Reverse Mortgage Lenders association told regional conference attendees in New York last week.
In an effort to work with the Consumer Financial Protection Bureau and its overall initiative to revamp all mortgage disclosure forms under a Dodd-Frank rule to combine the Truth in Lending form and the Good Faith Estimate into one form, NRMLA is in the process of creating a draft of new mortgage disclosures that are specific to reverse mortgage borrowers.
The next step for the proposal by NRMLA will be to make it available for industry comment before sending it to the CFPB for input.
“This is good news,” NRMLA counsel James Brodsky told conference attendees Monday, noting the complex forward process and distinctions between forward and reverse borrower needs and complexities. “This is recognition from a sophisticate regulator to appreciate that one size does not fit all.”
The draft has yet to be approved by the NRMLA board, but the association has a rough draft that it will distribute soon. The current draft is a four-page document that includes loan elements and calculations including a clear statement that the reverse mortgage is a special type of loan. It indicates loan terms, payment of proceeds and calculation of available loan proceeds. Additionally, the borrower will see intended disbursement, any payoffs, loan balance projection and total annual loan cost rate.
“It is a work in progress,” Brodsky said. “It seems a hopeful sign that the Bureau wants help. The NRMLA team is being quite thoughtful as it works its way through the process.”
The CFPB has undertaken an extensive process on the forward side, which it calls “Know Before You Owe.” Through a series of drafted documents released for public comment, the bureau is in the process of honing in on a final disclosure form under the Dodd-Frank mandate to create a single disclosure form.
Written by Elizabeth Ecker