FTC files comments with FFIEC on proposed guidance to help consumers avoid reverse mortgage deception – NMP Skip to main content

FTC files comments with FFIEC on proposed guidance to help consumers avoid reverse mortgage deception

Mar 19, 2010

The Federal Trade Commission (FTC) has filed comments with the Federal Financial Institutions Examination Council (FFIEC) supporting a measure designed to protect consumers from deceptive claims and to help them make better-informed decisions about whether to obtain a reverse mortgage. A reverse mortgage is a home-secured loan that becomes due when the homeowner moves, sells the home, dies, or fails to meet loan terms such as paying property tax or homeowners insurance. Although reverse mortgages have assisted many elderly consumers in drawing on the equity in their homes, some consumers may not fully understand these complex products or may be deceived by advertising claims made about them. In December 2009, the FFIEC issued proposed guidance for its members on how to deal with reverse mortgages. FFIEC members include the federal banking agencies--Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Office of Thrift Supervision, National Credit Union Administration--and the State Liaison Committee, which includes representatives from the Conference of State Bank Supervisors, American Council of State Savings Supervisors, and National Association of State Credit Union Supervisors. The comments, prepared by the staff of the FTC’s Bureaus of Consumer Protection and Economics and its Office of Policy Planning, describe FTC work in this area, including forming a federal-state working group to strengthen law enforcement efforts against illegal practices. The comments also note FTC consumer and business education efforts, such as including a revised consumer brochure, “Reverse Mortgages: Get the Facts Before Cashing in on Your Home’s Equity,” a new business alert to help housing counselors spot and report potentially deceptive claims, and presentations to reverse mortgage industry groups. FTC staff specifically supports the FFIEC’s efforts to advise lenders of the importance of not making deceptive claims for reverse mortgages and to provide them with concrete guidance as to the circumstances under which claims may be deceptive in violation of Section 5 of the FTC Act. The comments also encourage reverse mortgage lenders and brokers under the FTC’s jurisdiction to review and consider the proposed guidance’s advice and examples relating to deceptive claims. The comments further note the value of testing disclosures and other measures in certain circumstances to confirm that they are clear and useful and do not create unintended consequences. Click here to view the FTC's submitted comments to the FFIEC. For more information, visit www.ftc.gov.
About the author
Published
Mar 19, 2010
MISMO Launches AI Governance Framework For Mortgage Lenders

New FRAME toolkit gives lenders, servicers, and technology providers a roadmap for managing AI risk while supporting innovation

CFPB Tells Lenders Immigration Status Can Factor Into ATR Analysis

CFPB frames immigration status as a potential ability-to-repay factor when future U.S.-based income is at risk

UAD 3.6 Deadline Nears; First American Earns Verification

First American's ACI Sky Workbench gains verification ahead of the Nov. 2 implementation date for the GSEs' updated appraisal reporting requirements

MISMO Introduces New Loan Boarding Standard

Wrapper Files support standardized data transfers between origination and servicing systems, with potential savings of $60 to $160 per loan

The GLBA Compliance Gap Your AI Deployment Just Opened

Old statutes, new models, and the vendor contract you signed before machine learning became operational

FHA Keeps Tri-Merge Credit Reports While Expanding Approved Scoring Models

HUD says FHA lenders will continue using three-bureau credit reports even as the agency adopts newer scoring models aimed at increasing competition and modernizing mortgage underwriting