You can feel safe and have peace of mind when you take out a reverse mortgage. New consumer protections provide safeguards for seniors.

Reverse Mortgages Are Safer, New Consumer Protections

In the past, there were disreputable reverse mortgage lenders preying on seniors for their own profits. You may have heard horrible stories floating around. There is still good reason to research and make sure a reverse mortgage is the right loan product for your needs. A serious decision, like taking out a reverse mortgage, requires a measure of personal responsibility. To help, the government has taken steps to protect seniors through legal measures. Be familiar with the work the FFIEC and the FTC have done. Know what kind of protections you should expect from your reverse mortgage lender.

About the FFIEC

The FFIEC is the Federal Financial Institutions Examination Council. Members of the council include representatives from the 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.

About The FTC

The FTC is the Federal Trade Commission, and is the government body responsible for consumer protections in broad sectors of the economy. The FTC has recently submitted comments to the FFIEC recommending ways to improve consumer protections related to reverse mortgages.

Examples of Consumer Protections Already in Place

Mandatory Counseling - On all HUD reverse mortgages, a counseling session with a HUD-trained counselor is mandatory. HUD counselors are disinterested parties. They get a small fee for their counseling but do not make a commission or earn fees related to a new reverse mortgage. They should be able to objectively help you decide if a reverse mortgage is right for you or if there might be a suitable alternative.

Total Annual Loan Cost Disclosure (TALC) - Under the Truth-In-Lending rules, reverse mortgage lenders are required to provide all applicants for a reverse mortgage with a TALC disclosure within three business days of making the application. The TALC disclosure is a written statement of the reverse mortgage rate and closing costs. It is designed to allow and encourage shopping for the best reverse mortgage deal.

What the FFIEC and the FTC Are Working to Improve

• Better law enforcement against illegal practices by improving federal and state interaction.
• Education for consumers and businesses using a new 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.
• Making presentations to reverse mortgage industry groups, specifically about advertising. Encouraging reverse mortgage lenders not to make deceptive claims and providing examples of violations of Section 5 of the FTC Act.
• Testing advertising in advance to determine if it is well understood.

These are some of the ways that the FFIEC and the FTC are continuing to make reverse mortgages a safer loan product for seniors.

Renee Morgan

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