Today the Federal Financial Institutions Examination Council (FFIEC) released guidance on reverse mortgages.
The guidance was adopted by each of the financial regulators anmd emphasizes the consumer protection concerns around reverse mortgages. They also highlight the importance of financial institutions mitigating the compliance and reputation risks that are associated with mortgages.
According to a release from the FFIEC, the guidance also addresses the general features of reverse mortgage products as well as relevant legal requirements and consumer protection concerns related to reverse mortgages.
It zeroes in 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 offered while consumers are making decisions about these products and should address the specific matters listed in the guidance such as informing consumers of available alternatives to reverse mortgages.
The guidance also stated that institutions must take the steps to avoid any appearance of a conflict of interest and requires that consumers get qualified independent counseling.
It also addresses related policies, procedures, internal controls, and third-party risk management, according to the said release.