Financial Regulators Adopt Guidance on Reverse Mortgage Products

The Federal Financial Institutions Examination Council (FFIEC) released guidance today on reverse mortgage products. The guidance, adopted by each of the financial regulators, 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.

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 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. 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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Attachment: Reverse Mortgage Products: Guidance for Managing Compliance and Reputation Risks