CUNA on Reverse Mortgages
CUNA wants consumer advisory language strengthened in the proposed guidance regarding reverse mortgages while NAFCU would like to see additional guidance on what information must be included in advertisements.
The associations' comments came in recent letters to the Financial Institutions Advisory Council, which sent the proposed guidance out for comment in December.
CUNA Senior Assistant General Counsel Jeffrey Bloch wrote that the mandatory consumer counseling before a reverse mortgage can be approved should have to take place in person, rather than by telephone. He also recommended that while consumers should receive "general guidance and information," before they apply, the counseling sessions should take place after they file the application.
Bloch also expressed support for the provisions of the guidance that ban conflicts of interest and seek to avoid situations where the lender coerces borrowers into buying additional products.
The guidance recommends lenders to "adopt clear written policy and internal controls stating that neither the lender nor any broker will require the borrower to purchase any other financial or other product from the lender in order to obtain the reverse mortgage." The rules also mandate compensation policies that "guard against inappropriate incentives for loan officers and third parties."
NAFCU Associate Director of Regulatory Affairs Dillon Shea wrote that it is "impractical" to include an extensive list of disclosures "in all-or even most-promotional material." He recommended that the guidance should be "more explicit in terms of what disclosures should be made in advertisements."
The council suggests 10 items that should be disclosed in all promotional materials. These include borrower and property eligibility, alternatives to reverse mortgages and lump sum and disbursement options. The council's guidance can be found at www.ffiec.gov/guidance/.