The Federal Financial Institutions Examination Council (FFIEC) recently released guidance on reverse mortgage products. A copy of the guidance is available at:
The federal banking regulators' guidance emphasizes the consumer protection concerns raised by reverse mortgages and the importance of financial institutions mitigating the compliance and reputation risks associated with these products. The guidance also addresses the general features of reverse mortgage products and relevant legal requirements and consumer protection concerns raised by reverse mortgages. It focuses on the need for banks, thrifts, and credit unions to provide clear and balanced information to consumers about the risks and benefits of these products.
According to the guidance, this 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 guidance also states that institutions should take steps to avoid any appearance of a conflict of interest and requires that consumers receive qualified independent counseling. In addition, the guidance addresses related policies, procedures, internal controls, and third-party risk management.
The guidance will be effective 60 days after publication in the Federal Register, which is expected shortly.
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Ralph T. Wutscher
Kahrl Wutscher LLP
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