The Consumer Finance Protection Bureau (CFPB) is gearing up to enforce the nation’s equal credit laws, and reverse mortgage lenders could be in line of regulatory fire without uniform HECM needs-assessment guidelines from the US Department of Housing and Urban Development (HUD).
In the absence of uniform rules from HUD (HECM’s creator, insurer, and police), present every-lender-to-itself “financial assessment” is an invitation to claims of discrimination, regulatory headaches, and bad press for lenders and the industry.
As demonstrated by industry financial-assessment initiatives since last November, reverse mortgage lenders want to do the right thing , but they need to know what that “right thing” is from HUD. For more than 22 years, “financial assessment” was not part of the reverse mortgage origination process. Persistent and growing tax and insurance defaults have changed that. Some form of loan-sustainability assessment is now necessary for the good of borrowers, lenders, investors, and US taxpayers.
As I argued in my new column in NRMLA’s Reverse Mortgage Magazine (May-June 2012 issue), whole-person assessment guidelines are needed. With CFPB ready to enforce federal equal credit laws, absence of uniform rules that only HUD can propose could hurt lenders and the industry.
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