The Federal Financial Institutions Examination Council (FFIEC), on behalf of its member regulators, has proposed guidance designed to help financial institutions ensure that their risk management and consumer protection practices adequately address the compliance and reputation risks raised by reverse mortgage lending.
The proposed guidance addresses the general features of reverse mortgage products, relevant legal requirements and consumer protection concerns raised by reverse mortgages. The FFIEC's proposals stress the need for lenders to provide clear and balanced information to consumers about the risks and benefits of these products.
Such information should be provided while consumers are making decisions about these products and should address the specific matters listed in the guidance, including informing consumers of available alternatives to reverse mortgages, the FFIEC says.
The proposed guidance also states that institutions should require that consumers receive qualified independent counseling and take steps to avoid any appearance of a conflict of interest. The proposed guidance addresses related policies, procedures, internal controls and third-party risk management.
Comments must be received 60 days from publication in the Federal Register.