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Washington
Reverse mortgage guidance generally helpful CUNA
WASHINGTON (2/17/10)--The Credit Union National Association (CUNA) in a Feb. 16 comment letter to the Federal Financial Institutions Examination Council (FFIEC) said that it generally supports the FFIEC’s proposed guidance for reverse mortgages. While the majority of credit unions do not currently offer reverse mortgage loans and those that do “are likely already compliant with the principles outlined in the guidance,” Bloch said that CUNA understands the need for the FFIEC guidance, as the complexity of reverse mortgage loans may create greater opportunities for “abuses and excessive fees” by some lenders. Citing the complexity of reverse loans, which can often come with significant fees, CUNA said it supports the FFIEC’s requirement for financial counseling “and believes that, with limited exceptions, such counseling should be done in-person, as opposed to telephone conversations,” CUNA Senior Assistant General Counsel Jeff Bloch said. CUNA has argued that telephone counseling is ineffective. “However,” Bloch added, “although consumers should receive general information and guidance about reverse mortgages before the application is submitted, much of the required counseling should occur after the application is submitted for a proprietary reverse mortgage loan, since the counseling will be more targeted and, therefore, more beneficial after the consumer applies for a specific loan.” Additionally, CUNA supports portions of the guidance that address potential conflicts of interest as well as the FFIEC’s recommended policies, procedures, and internal controls that lenders should take on, including recommendations on how lenders can manage third-party relationships. For the full CUNA comment letter, use the resource link.


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