The new Consumer Financial Protection Bureau (CFPB) was created under the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act with one main goal: make financial products as safe and straightforward as possible for consumers.
Consumers have the ability to contact the agency regarding questions or concerns about financial products they purchase or use, including loans such as reverse mortgages.
Launched in July, 2011, the CFPB has yet to say much about reverse mortgage products.
Having inherited authority from five different government agencies, it has been busy in auditing lenders across the country and ensuring that the required consumer protections are in place, including fair lending.
While the Department of Housing and Urban Development (HUD) and other federal agencies have been responsible for regulating reverse mortgages in the past, the CFPB will likely play a very active role in the marketplace.
The agency has been tasked to conduct a study of the reverse mortgage industry, to be completed in July of 2012. Depending on the findings of the study, the CFPB could implement changes it feels are needed to protect consumers.
Earlier this year the agency launched a “Ask the CFPB” initiative as a resource for consumers to obtain information on financial products. Reverse mortgage questions and answers can be found on the site, from what happens when the loan becomes due and payable to how to prepare for a reverse mortgage counseling session—a required step in the loan process.
The CFPB also established an Office of Older Americans and chose Director Skip Humphrey to lead the new division, which is charged with ensuring that American senior citizens are protected in the financial choices they make.
The new agency has also launched a new feedback tool that allows consumers to file complaints through the CFPB’s consumer complaint portal.
Changes ahead for reverse mortgages
One potential change that is being discussed by the lending community and the CFPB involves the rules around origination fees that brokers and lenders can charge on mortgage loans.
Another agency effort toward borrower-facing change is to combine mortgage disclosures including the Truth in Lending Disclosure and the HUD-1 Settlement Statement into a single, easy-to-understand document. That process is under way for forward mortgage disclosures, with a review of reverse mortgage documents that is expected soon.
While there are many protections already in place for reverse mortgages, the CFPB is one more government body that serves to make the lending process as safe and transparent as possible.
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