Comptroller of the Currency John Dugan is urging HUD to require escrow accounts for tax and insurance on FHA-insured reverse mortgages while the banking regulators work on consumer protection guidelines.
The Federal Housing Administration-insured home equity conversion mortgage is the predominant reverse mortgage product in the nation, Mr. Dugan told an American Bankers Association compliance conference.
The reverse market is expected to grow substantially in coming years, he said, and "it is a product fraught with consumer concerns." He noted that seniors can receive the loan proceeds in one lump-sum payment and failure to pay taxes and insurance during the life of the loan can lead to foreclosure.
"I think it would be a major step forward for HUD to issue guidelines or requirements addressing the escrow issue for HECMs, and I would like to begin dialogue with them on the issue," the Comptroller said.
