In June, Consumers Union issued a series of concerns regarding reverse mortgages, calling upon the Consumer Financial Protection Bureau to address some of those issues. At the time, Consumers Union made recommendations toward improvement of the market including suitability standards, fiduciary responsibility, outlawing deceptive marketing, stronger anti-cross selling promotions, stronger counseling and protection of non-borrowing spouses and tenants.
Following the CFPB’s report, Consumers Union’s Senior Attorney Norma Garcia says some of the issues have showed improvement, but that the industry still needs to self regulate.
In response to a code of conduct and ethics recently implemented by the National Reverse Mortgage Lenders Association, Garcia says this is a step in the right direction.
“We’re glad to hear there is a good segment of the industry that sees benefit in the fiduciary structure and suitability issue,” she told RMD. “We are happy to hear this and we are encouraged,” she said.
Self-regulation remains an important issue, however, from the standpoint of the consumer advocacy group.
“It is always an option,” Garcia says. “You shouldn’t have to wait for someone to tell you to do it to be adopting safe business practices.”
More oversight is needed in light of the industry’s self governmnent, she says, with the CFPB report being a good starting point for new potential regulations and enforcement.
“It hasn’t always proven to be effective enough,” Garcia says of self regulation. “There should be regulatory enforcement and oversight to make sure this works well. These are some of the questions the CFPB is looking at. We’re anxious to see what kinds of proposals they put forth to achieve this. We’re now taking a close look at these and other questions. The motivation is the same: how do we make sure there are systems in place to strengthen this market?”
Written by Elizabeth Ecker