Interagency Guidance on Managing Compliance and Reputation Risks for Reverse Mortgage Products

The 2010 reverse mortgage guidance is designed to help financial institutions ensure that their risk management and consumer financial protection practices adequately address the compliance and reputation risks raised by reverse mortgage lending. The guidance discusses the general features of reverse mortgage products, relevant legal requirements, and consumer financial protection concerns raised by reverse mortgages. The guidance 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. Both proprietary products and HECMs are subject to various laws governing mortgage lending including the Federal Trade Commission Act, RESPA, TILA, and fair lending laws. HECMs are also subject to an extensive regulatory regime established by HUD, including provisions for FHA insurance of HECM loans that protect both lenders and reverse mortgage borrowers. The guidance supplements those requirements by advising lenders about additional practices that should be implemented to manage the risks associated with reverse mortgage products. In August 2010, the Federal Financial Institutions Examination Council (FFIEC), on behalf of its member agencies, published a Federal Register notice adopting supervisory guidance titled “Reverse Mortgage Products: Guidance for Managing Compliance and Reputation Risks.” The guidance is designed to help financial institutions with risk management and assist financial institutions’ efforts to ensure that their reverse mortgage lending practices adequately address consumer compliance and reputation risks. The reverse mortgage guidance discusses the reporting, recordkeeping, and disclosures required by federal laws and regulations and also discusses consumer disclosures that financial institutions typically provide as a standard business practice. Certain portions of the guidance are “information collections” subject to the PRA’s requirements.

The latest form for Interagency Guidance on Managing Compliance and Reputation Risks for Reverse Mortgage Products expires 2021-09-30 and can be found here.

Implementation of Policies and Procedures

Federal Enterprise Architecture: Economic Development - Financial Sector Oversight